eco2023 chapter 16

the law of one price holds exactly only if

B) transaction costs are zero

why is price discrimination legal but not discrimination based on race or gender

C) because price discrimination involves charging people different prices based on their willingness to pay rather than on the basis of arbitrary characteristics

price discrimination

C) is the practice of charging different prices to different customers when the price differences cannot be attributed to variations in cost

in the real world

C) many firms charge different prices based on consumers' willingness to pay

some firms practice odd pricing because

C) they believe that customers will buy a larger quantity with an odd price

one method of setting price using the cost-plus method is to add

D) a given percentage of average total cost to average total cost

when you buy at a low price in one market then sell at a higher price in another market you are engaging in

D) arbitrage

which of the following products allows the seller to identify different groups of consumers (segment the market) at virtually no cost?

D) early bird dinner specials

which of the following is not an advantage of cost-plus pricing

D) it leads to profit maximization

price discrimination is possible in which of the following market structures?

D) monopolistic competition

firms price discriminate

D) to increase profits

if a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations, then it is engaging in

A) price discrimination

a firm's efforts to increase profit by price discrimination can be undermined by

B) arbitrage by buyers

assuming zero transaction cost, if your local grocer buys oranges at a low price from an orchard and resells them to you at a higher price, then the grocer's revenue minus cost is known as

B) arbitrage profits

a firm that can effectively price discriminate will charge a higher price to

B) customers who have the more inelastic demand

which of the following is a necessary condition for successful price discrimination?

B) the seller must possess market power