Reading 19: Monopoly - LOS c ～ Q1-5

答案和详解如下：

1.Price discrimination is most accurately defined by which of the following? Price discrimination is the practice of charging different consumers different prices for:

A)   similar products that have identical per-unit production costs.

B)   products that have identical price elasticities of demand.

C)   similar products that have different price elasticities of demand.

D)   the same product or service.

The correct answer was D)

Price discrimination is the practice of charging different consumers different prices for the same product or service. Examples include different prices for airline tickets based on whether a Saturday-night stay is involved and different prices for movie tickets based on age.

2.Which of the following is least accurate regarding the allocative efficiency associated with price discrimination? Price discrimination:

A)   results in gains to the discriminating firm by selling to consumers with relatively inelastic demand.

B)   increases production closer to the quantity where price equals marginal cost.

C)   leads to a decrease in allocative efficiency.

D)   leads to production where the sum of consumer surplus and producer surplus is greater than it would be otherwise.

The correct answer was C)    

Allocative efficiency occurs when the quantity produced maximizes the sum of consumer and producer surplus. That is, where marginal benefit equals marginal cost. Price discrimination reduces the allocative inefficiency that exists when prices are greater than marginal cost by increasing output toward the quantity where price equals marginal cost. Firms gain by selling to customers with inelastic demand while still providing goods to customers with more elastic demand. This may even cause production to take place at a level where it would not take place otherwise.

3.Which of the following is least likely to be considered a necessary condition for a monopolist to realize profits from price discrimination?

A)   A product for which the demand curve is downward sloping.

B)   At least two groups of customers, each with a different price elasticity of demand.

C)   The ability to prevent trading between customers in different price groups.

D)   Two different costs of production.

The correct answer was D)

Price discrimination works when the seller (discriminator) faces a downward-sloping demand curve and has at least two customer groups each having different price elasticities for the product. It is also necessary that trading does not occur between customer groups so that the customers paying a lower price cannot resell the product to the customers paying a higher price.

4.Consider the following statements:

Statement 1: “The sum of consumer and producer surpluses is maximized under both monopoly and perfect competition.”

Statement 2: “All else being equal, a monopolist that practices price discrimination will be more allocatively efficient than a single-price monopolist.”

Which of the following best describes the accuracy of these statements?

A)                                        Incorrect       Correct

B)                                        Correct  Correct

C)                                        Correct  Incorrect

D)                                        Incorrect       Incorrect

The correct answer was A)

Statement 1 is incorrect because the sum of consumer and producer surpluses is maximized under perfect competition when marginal benefit and marginal cost are equal, or equivalently, where the marginal cost curve intersects the demand curve. Monopolies, however, produce a quantity that is less than the quantity where marginal cost equals marginal benefit, so the sum of producer and consumer surpluses is not maximized.

5.For price discrimination to work, the seller must face a market with all of the following characteristics EXCEPT:

A)   high barriers to entry.

B)   a downward sloping demand curve.

C)   two or more identifiable groups of customers with different price elasticities of demand for the product.

D)   a way of preventing customers from purchasing the product at a lower price and reselling it at a higher price.

The correct answer was A)

Price discrimination is the practice of charging different consumers different prices for the same product or service. For price discrimination to work the seller must: 1) have a downward sloping demand curve, 2) have at least two identifiable groups of customers with different price elasticities of demand, 3) must be able to prevent customers in the lower-price group from reselling the product to customers in the higher-price group.