Price discrimination is the practice of selling the same good at more than one price when the price differences are not justified by cost differences. Evaluate the following statement: "Price discrimination is not possible when a good is sold in a perfectly competitive market." False, because perfectly competitive firms do not profit maximize by setting marginal revenue equal to marginal cost None of these choices True, because perfectly competitive firms have no market power False, because perfectly competitive firms have market power Which of the following kinds of price discrimination occurs when each customer in a single market is charged the maximum price he or she is willing to pay? Perfect price discrimination Third-degree price discrimination Second-degree price discrimination This is not an example of price discrimination

Price discrimination is the practice of selling the same good at more than one price when the price differences are not justified by cost differences. Evaluate the following statement: "Price discrimination is not possible when a good is sold in a perfectly competitive market." False, because perfectly competitive firms do not profit maximize by setting marginal revenue equal to marginal cost None of these choices True, because perfectly competitive firms have no market power False, because perfectly competitive firms have market power Which of the following kinds of price discrimination occurs when each customer in a single market is charged the maximum price he or she is willing to pay? Perfect price discrimination Third-degree price discrimination Second-degree price discrimination This is not an example of price discrimination

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter25: Monopoly

Section: Chapter Questions

Problem 3E

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Price discrimination does not occur in perfectly competitive markets, such as the market for wheat. Which of the following explains why farmers do not charge different buyers different prices for wheat? O Each buyer has the same willingness to pay for wheat as every other buyer of wheat. Because wheat is a homogeneous product, any bushel of wheat must sell at the same price as every other bushel of wheat. Farmers don't use price discrimination to sell wheat because this would lead to an increase in the number of wheat farmers. This would lower profits wheat farmers would earn in the long run. The cost of using price discrimination to sell wheat would be greater than the profits that would result from price discrimination.
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Price and cost (dollars per pound of steak) 20.00 18.00 S=MC 16.00 14.00 12.00 10.00 8.00 6.00 4.00 2.00 MR D 1,000 2,000 3,000 4,000 5,000 Quantity (pounds of steaks per hour)
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Below is the demand schedule for wholesale pallets of ice cream. Assume that the marginal cost of supplying a wholesale pallet of ice cream is a flat $40 per pallet. Price Quantity Total Revenue Total Cost Profit $100 40 $90 50 $80 60 $70 70 $60 80 $50 90 $40 100 First, complete the table above for TR, TC, and profit. If this were a competitive industry, where P=MC, what would be the price and quantity of wholesale ice cream? If ice cream were supplied instead by a profit-maximizing monopoly, what would be the price and quantity? If Ben and Jerry were to form a collusive duopoly for the production of ice cream, what would be the price and industry quantity? If Ben and Jerry split the market in d. evenly, what would be the output and profit for each of them? What if Ben were to cheat on the cartel and produce a higher output by 10 pallets: What is Ben’s resulting output…