econ exam questions

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which condition is not necessary for price discrimination

the firm must set different prices to reflect marginal cost

which condition is not necessary for price discrimination to exist

the firm must set different prices to reflect marginal cost

what product is least likely to be produced in a perfectly competitive market

airline jet fuel

If a firm is producing where price exceeds AVC, the firm should continue production even though it may incur a loss since

average revenue is equal to or greater than the average variable costs

first degree price discrimination

charging each individual customer a different price based on their willingness to pay

A competitive firm facing a price of $15 decides to produce 100 units. If the marginal cost of producing the last unit is $20, the profit-maximizing firm should

decrease production

If demand is inelastic, a reduction in price

decreases total revenue

the demand curve for an individual perfectly competitive firm is

downward sloping

normal profit is equal to

economic profit is equal to 0

the more responsive buyers are to change in price

elastic

The price of gold increases by 200%. If the price elasticity of demand for gold is 0.4, what will happen in the market?

gold sales will decrease by 80%

if demand is inelastic a(n) _____ in the price leads to ____in total revenue

increase, decrease

If the managers of the Miami Transit Authority (MTA) raise the fare from $2.00 to $2.25 per ride and, as a result, total revenue increases, then we know that the demand for rides is

is price inelastic

which type of discrimination is as efficient as a competitive market firm

perfect price discrimination/ first degree

the demand curve for an individual perfectly competitive market is

perfectly elastic

second degree price discrimination

practice of charging different prices per unit for different quantities of the same good or service

third degree price discrimination

practice of dividing consumers into two or more groups with separate demand curves and charging different prices to each group

other things held constant, when demand is price inelastic, an increase in

price leads to an increase in total revenue

if a company uses 3rd degree price discrimination which example is NOT this

Reservation pricing for each consumer.

consider perfect competition (graph) if price equals .70 cents the firm should

stay open because its making a normal profit

a firm will engage in price discrimination when it believes that doing so will increase

profits

assume that P1>P2>AVC. if market price decreases from P1 to P2 then the perfectly competitive firm that maximizes profits should

reduce production

if the price of a product with elastic demand increases

total revenue will fall


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