Reading 19: Monopoly-LOS c 习题精选 2011, face, different, efficient, practice

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Session 5: Economics: Market Structure and Macroeconomic Analysis
Reading 19: Monopoly

LOS c: Explain price discrimination and why perfect price discrimination is efficient.

 

 

The practice of charging different consumers different prices for the same product or service is called:

A) price searching.

B) variable pricing.

C) price discrimination.

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The practice of charging different consumers different prices for the same product or service is called price discrimination.

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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.”

With respect to these statements:

A) both are correct.

B) only one is correct.

C) both are incorrect.

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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.

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

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

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

C) Two different costs of production.

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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.

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

A) leads to a decrease in allocative efficiency.

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

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

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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.

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

A) the same product or service.

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

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

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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.

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In order for effective price discrimination to occur the seller must:

A) face a demand curve with a negative slope.

B) have more than one identifiable group of customers with the same price elasticities of demand for the product.

C) maximize revenue by selling at the highest price possible.

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In order for effective price discrimination to occur, the seller must have a downward sloping demand curve. The seller must also have at least two identifiable groups of customers with price elasticities of demand for the product, and the seller must be able to prevent customers from reselling the product.

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A practice whereby a seller charges different prices to different consumers of the same product or service is called:

A) price discrimination.

B) price competition.

C) discriminatory pricing.

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Price discrimination is the practice of charging different consumers different prices for the same product or service.

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

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

B) a downward sloping demand curve.

C) high barriers to entry.

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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.