24.4 On Making Higher Profits: Price Discrimination

Consider a price discriminating monopolist. Which of the following is​ true? A. The monopolist will sell some of its output at higher prices to consumers with less elastic demand. B. A monopoly will engage in price discrimination whenever feasible to increase profits. C. Charging different prices to different customers does not mean the monopoly is necessarily using price discrimination. D. All of the above are true. E. None of the above are true.

D. All of the above are true.

Which of the following would definitely not be an example of price​ discrimination? A. A hair salon charging men less than women for hair cuts. B. A theater charges children less than adults for a movie. C. Universities charge higher tuition for​ out-of-state residents. D. An electric power company charges less for electricity used during​ off-peak hours when production costs are lower.

D. An electric power company charges less for electricity used during​ off-peak hours when production costs are lower.

Which case below best represents a case of price​ discrimination? A. A major airline sells tickets to senior citizens at lower prices than to other passengers. B. A professional baseball team pays two players with different batting averages different salaries. C. An insurance company offers discounts to safe drivers. D. A utility company charges less for electricity used during​ "off-peak" hours, when it does not have to operate its​ less-efficient generating plants.

A. A major airline sells tickets to senior citizens at lower prices than to other passengers.

Which of the following is not necessary for price discrimination to​ exist? A. A perfectly elastic demand curve. B. Buyers in various markets must have different price elasticities of demand. C. The ability to prevent resale of the product or service. D. The ability to separate markets at reasonable cost

A. A perfectly elastic demand curve.

Charging different prices for similar products that have different marginal costs is called A. price differentiation. B. predatory pricing. C. price discrimination. D. price dumping.

A. price differentiation.

If a public utility company is considered a​ monopolist, which of the following is not​ true? A. Its price must be higher than its marginal revenue. B. The​ company's demand curve and supply curve are upward sloping. C. For the company to practice price​ discrimination, there should not be any resale of its product. D. Its profit maximizing quantity is determined where its marginal revenue equals its marginal cost.

B. The​ company's demand curve and supply curve are upward sloping.

In order to price​ discriminate, a firm must A. set price equal to marginal cost. B. face a​ downward-sloping demand curve. C. be sure the​ price-marginal cost ratio is the same for all its submarkets. D. have permission from the government.

B. face a​ downward-sloping demand curve

All of the following are necessary conditions for price discrimination except A. the firm must be able to identify buyers with different elasticities of demand. B. the firm must be a price taker. C. the firm must face a​ downward-sloping demand curve. D. the firm must be able to prevent resale of the product.

B. the firm must be a price taker

For each of the following​ examples, which group will pay the higher price​ (as a result of having less elastic​ demand)? Air transport for businesspeople and tourists. _________ Serving food on weekdays to businesspeople and retired people.​ ________ A theater that shows the same movie to large families and to individuals and couples. _________

Business people Business people Individuals and couples

Which of the following statements about price discrimination is​ true? A. Successful price discrimination occurs when there are differences in the costs of producing for different groups of buyers. B. Successful price discrimination will provide the firm with lower total profits than if it did not discriminate. C. Successful price discrimination will provide the firm with more profit than if it did not discriminate. D. Successful price discrimination will generally result in a lower level of output than would be the case under a​ single-price monopoly.

C. Successful price discrimination will provide the firm with more profit than if it did not discriminate.

Price discrimination is the sale of a given product at _____ than one price with the price differences being _____ to differences in marginal cost. Three conditions are necessary for price​ discrimination: (1) The firm must face _____ ​-sloping demand​ curve, (2) the firm must be able to identify buyers with predictably different price _____ of​ demand, and​ (3) _____ of the product or service must be preventable. Price _____ should not be confused with price _____​, the latter of which occurs when differences in price reflect differences in marginal cost.

more unrelated a downward elasticities resale discrimination differentiation