Managerial Economics: A Problem Solving Approach
5th Edition
ISBN: 9781337106665
Author: Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher: Cengage Learning
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Chapter 14, Problem 3MC
To determine
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Which of the following is a necessary condition for price discrimination?
Group of answer choices
a. Buyers are aware of prices charged to other buyers.
b. The seller is a perfectly competitive firm.
c. Buyers have identical elasticities of demand.
d. Resale of the product or service is possible.
e. The seller can separate consumers according to their elasticities of demand.
1. A manufacturer estimates that D(p)=3000e0.05p units of a particular good will be
sold at market price of p cedis per unit. Determine the market price that will result in
marginal revenue of zero.
2. A manufacturer estimates that q = 800/30 – p units of a commodity are demanded
when
cedis
per
unit are charged.
a. Express the price elasticity of demand as function of p .
b. Calculate the price elasticity of demand when p=10. Interpret the result.
c. Find the price at which the price elasticity of demand is unit-elastic.
3. An auto maker estimates that when q units of its saloon cars are sold in a day, its
profit in millions of cedis is modelled as
P(q) =100+25In
20
Find the
2
number of cars that should be produced and sold to maximise profit.
a.
b.
If a firm's the price elasticity of demand (Eg) to be-3.5 and marginal cost (MC) is $15.
Using the mark-up rule, what is the optimal price for the firm to charge?
If the price elasticity of demand (En) changes to -3.0, and MC is still $15. Use the
mark-up rule to find the new optimal price for the firm to charge?
What is the defining feature of a Pure Selling Problem and what impact does it have
one the firm's goal to maximize profit?
Chapter 14 Solutions
Managerial Economics: A Problem Solving Approach
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- Which of the following is necessary for a firm to practice price discrimination? Group of answer choices a. The firm is a member of a cartel. b. The demand curve for the product is perfectly inelastic. c. The firm can prevent resale of its goods. d. The government strictly enforces antitrust laws. e. The demand curve for the product is perfectly elastic.arrow_forwardWhich of the following is NOT a condition necessary for price discrimination? a.The product cannot be resold to another customer. b. the product must be a durable good c. the seller must have some market power d. The price elasticities of demand are different for each group of consumers.arrow_forwardYou and your friend who just graduated visit a local ice cream parlor. By showing your student id you are able to buy an ice cream cone for $1 cheaper than your friend. What type of price discrimination is this an example of? A. First-degree price discrimination B. Second-degree price discrimination C. Third-degree price discrimination D. Fourth-degree price discriminationarrow_forward
- Which of the following is not a requirement for a successful price discrimination strategy? A. A firm must have market power B. The firm must be able to prevent consumers who buy a product at a low price from reselling it to other consumers at a high price. C. Some consumers must have greater willingness to pay for the product than other consumers, and the firm must be able to know what prices consumers are willing to pay D. The good must be a very expensive goodarrow_forwardThe practice of posting a discrete schedule of declining prices for different ranges of quantities. Select one: a. First-degree price discrimination b. Fourth degree price discrimination c. Third-degree price discrimination d. Fifth degree price discrimination e. Second-degree price discrimination.arrow_forwardWhich of the below is NOT an example of price discrimination? a. A store that offers a senior’s discount on Thursdays. b. A fast-food restaurant sending coupons to the public. c. A grocery store that offers better pricing if the customer buys in bulk. d. Competing grocery stores have different prices for milk.arrow_forward
- Price discrimination is the practice of selling goods at different prices to different consumers. The most common form of price discrimination is the practice of selling goods to different groups of customers at different prices. Many businesses offer students and senior citizens discounts not available to other customers. Firms engage in price discrimination in an effort to increase their profits. a. Identify three conditions that must be met for price discrimination to occur. b. Discuss the effectiveness of different strategies implemented to deal with the problems caused by increased road transport use in urban areas. c. 'Transportation patterns in Jamaica reflect the flow of people and commerce'. Discuss the significance of this statement highlighting the implications for the country as the government attempts to develop a first-world transportation system.arrow_forwardAs a producer, how would you use the information about elasticity to maximize your revenue? Explain. Use graph and show answer step by step .Answer must be correct. Do answer follow question. Read all part and then answer.arrow_forwardWhich of the following is not an example of price discrimination? a. Senior citizen discount at the movies b. Grocery coupons c. Shipping a package further costs more d. Charging a higher price for ice-cream during the summer and a lower price in the winterarrow_forward
- If a firm engages in perfect price discrimination, it charges a. different prices to customers based on how many units of output they buy b. each customer the highest price the customer is willing to pay c. different prices to customers based on how old they are d. each customer the average cost of the product e. each customer the lowest price the customer is willing to payarrow_forwardQuestion 18 Alex Potter owns the only well in a town that produces clean drinking water. He faces the following demand P=200-2Q, and marginal cost MC=50+2Q, marginal revenue MR= 200-4Q curves. In order to maximize profits, Alex should charge a price of $150 at the profit maximizing quantity with a marginal revenue equal to $150. $100 at the profit maximizing quantity with a marginal revenue equal to $150. $100 at the profit maximizing quantity with a marginal revenue equal to $100. $150 at the profit maximizing quantity with a marginal revenue equal to $100. O Oarrow_forwardWhich of the following is NOT an example of price discrimination? a. Christmas sales b. student discounts at the supermarket c. discounted meals for children at Burger King d. airlines charging lower prices to travelers who travel on Sunday nightarrow_forward
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