Which positive outcome would occur if this firm was able to perfectly price discriminate

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Save text online apiThree conditions must exist to enable a firm to profitably price discriminate: (a) the firm must have market power, (b) the firm must be able to distinguish among buyers on the basis of their demand-related characteristics (e.g. demand elasticity or reservation price), and (c) the firm must be able to constrain resale between buyers with high ... Recall from our discussion of perfect competition that when firms are able to obtain economic profits, other firms/entrepreneurs are attracted to the industry and entry will occur until economic profits are reduced to zero. But if there is a barrier, entry by profit-seeking firms does not happen and economic profits can persist. Question: ____ 1. A Firm’s Accounting Profit Is Always Greater Than Its Economic Profit Because: A. Economic Profit Considers Implicit Costs, Which Accounting Profit Does Not. B. Accounting Profit Considers Explicit Costs, Which Economic Profit Does Not. C. Economic Profit Is Always Zero, No Matter What Kind Of Firm It Is. D. Accounting Profit Considers Implicit ... Three conditions are necessary for a firm to be able to price discriminate: o A firm must have market power, otherwise, it cannot charge any consumer more than the competitive price o Consumers must differ in their sensitivity to price and a firm to be able to identify how consumers differ in this sensitivity Free markets can allow discrimination to occur, but the threat of a loss of sales or a loss of productive workers can also create incentives for a firm not to discriminate. A range of public policies can be used to reduce earnings gaps between men and women or between white and other racial/ethnic groups: requiring equal pay for equal work, and ...

The four characteristics of perfect competition mean a perfectly competitive firm faces a horizontal or perfectly elastic demand curve, such as the one displayed in the exhibit to the right. Each firm in a perfectly competitive market is a price taker and can sell all of the output that it wants at the going market price, in this case $2.50. Jan 13, 2020 · Price inelasticity shows that customers—and by extension, demand—are more tolerant to price changes. Therefore, firms that deal in inelastic goods or services can transfer the extra cost of ... comparing the non-price discriminating monopoly outcome to the perfectly price discriminating outcome, profits are _____ when price discriminating c Suppose a monopolist charges a uniform price of $10 based on profit maximization and has constant marginal costs of $3. A) all firms make positive economic profits. B) all firms produce at the minimum point of their average total cost curves. C) the industry supply curve must be upward-sloping. D) all firms face the same price, but the value of marginal cost will vary directly with firm size. Price discrimination is a situation in which a firm is able to charge different prices to different (groups of) consumers for the same product. In order for a firm to price discriminate (as well as the standard conditions for a monopoly), a) the firm must be able to distinguish between consumers with different demand – i.e. consumers have

  • We knives 819Learn for free about math, art, computer programming, economics, physics, chemistry, biology, medicine, finance, history, and more. Khan Academy is a nonprofit with the mission of providing a free, world-class education for anyone, anywhere. d) The incentive to cheat in a cartel will be greater when the cartel produces a homogeneous good. e) A member of a cartel has no incentive to violate the rules of the cartel since the cartel equates marginal revenue to marginal cost, thereby maximizing the profit of each member.
  • Mar 17, 2017 · In order to be able to price discriminate among consumers, a firm must have some market power and not operate in a perfectly competitive market.More specifically, a firm must be the only producer of the particular good or service that it provides. D) important to firms in perfectly competitive markets. 9. The problem of technological lock-in occurs because: A) more efficient technologies replace less efficient ones. B) less efficient technologies replace more efficient ones. C) prior use of a technology makes the adoption of subsequent technologies difficult.
  • Dell optiplex 3020 graphics cardA market is more efficient, and society is better off, whenever a price-making firm is able to price-discriminate, even when consumer surplus is converted to producer surplus. True (Markets in which firms price-discriminate are more efficient because deadweight loss is reduced.)

Jun 14, 2019 · Positive production externalities are positive effects that originate during the production process of a good or service. An example of this could be an orchard placed next to a beehive. In this situation, both the farmer and the beekeeper benefit from each other, even though from an economic perspective, neither of them has considered the ... Three conditions must exist to enable a firm to profitably price discriminate: (a) the firm must have market power, (b) the firm must be able to distinguish among buyers on the basis of their demand-related characteristics (e.g. demand elasticity or reservation price), and (c) the firm must be able to constrain resale between buyers with high ... Jan 13, 2020 · Price inelasticity shows that customers—and by extension, demand—are more tolerant to price changes. Therefore, firms that deal in inelastic goods or services can transfer the extra cost of ... Economic profit for firms in perfectly competitive markets Our mission is to provide a free, world-class education to anyone, anywhere. Khan Academy is a 501(c)(3) nonprofit organization.

First-degree price discrimination has huge costs both in terms of the cost needed to gather enough information about buyers to guess reservation prices well, and in terms of the added costs when buyers catch on to the strategy and put moral pressure on the seller or otherwise try to fool the seller. Short Run and Long Run Equilibrium under Perfect Competition (with diagram)! Under perfect competition, price determination takes place at the level of industry while firm behaves as a price taker. It produces a quantity depending upon its cost structure. The industry under perfect competition is defined as all the firms taken together. 3com switch enable portJan 16, 2018 · Discover how come economic profits are theoretically impossible in a perfectly competitive market and why some economists use perfect competition models. ... firms can only experience profits or ... competitive firm is horizontal, perfectly elastic. This is so for the pure competitor because the firm faces a multitude of competitors, all producing perfect substitutes. In these circumstances, the purely competitive firm may sell all that it wishes at the equilibrium price, but it can sell nothing for even so little as one cent higher. First, the firm needs to have at least some market power. If it has no market power, then it can’t charge different prices for different customers. Second, the firm needs to be able to sort the customers into those willing to pay a higher price and those who are no, but who would be willing to pay a lower price. Thus if a firm can cover its variable costs and still have revenue to contribute to its fixed costs, it loses less money by producing than by shutting down. Our rule of producing where marginal revenue equals marginal cost still applies, but since price is below ATC the firm’s loss is represented by the area below ATC and above the demand curve.

One of the ways that a perfectly competitive firm and a nondiscriminating monopolist are different is that a. the marginal cost curve is U-shaped for a perfectly competitive firm but not for a monopolist b. P = AR for a perfectly competitive firm but not for a monopolist c. P = MR for a perfectly competitive firm but not for a monopolist d. Economic profit for firms in perfectly competitive markets Our mission is to provide a free, world-class education to anyone, anywhere. Khan Academy is a 501(c)(3) nonprofit organization. Efficiency and Rent Seeking with Price Discrimination The more perfectly a monopoly can price discriminate, the closer its output is to the competitive output (P = MC) and the more efficient is the outcome. But this outcome differs from the outcome of perfect competition in two ways: 1. The monopoly captures the entire consumer surplus. 2. 1) The marginal-cost curve intersects the average-total-cost curve at the minimum point of the marginal-cost curve. a.True b.False Answer: 2) In which of the following games is it clearly the case that the cooperative outcome of the game is good for the two players and bad for society? a.Two oil companies own adjacent oil fields …

Information transmission and incentives not to price discriminate 289 Under Bertrand competition each firm chooses a single price given there is perfect arbitrage and thus it is not possible to ... The firm must be able to separate the market into at least two different groups of customers – high demanders, those willing to pay a higher price, and low demanders, those only willing to buy at a much lower price. If the firm can’t do this, they will be unable to identify which group should pay the higher price and which the lower price. If a firm has exclusive ownership of a scarce resource, such as Microsoft owning the Windows operating system brand, it has monopoly power over this resource and is the only firm that can exploit it. Governments may grant a firm monopoly status, such as with the Post Office, which was given monopoly status by Oliver Cromwell in 1654. Nov 12, 2009 · Suppose a perfectly discriminating monopolist faces market demand P=100-10Q and has constant marginal cost MC=20 (with no fixed costs). How much does the monopolist sell? How much profit does the monopolist earn? What is the maximum per-period license fee the government could charge the firm and have the firm still stay in business?

First, the firm needs to have at least some market power. If it has no market power, then it can’t charge different prices for different customers. Second, the firm needs to be able to sort the customers into those willing to pay a higher price and those who are no, but who would be willing to pay a lower price. Recall from our discussion of perfect competition that when firms are able to obtain economic profits, other firms/entrepreneurs are attracted to the industry and entry will occur until economic profits are reduced to zero. But if there is a barrier, entry by profit-seeking firms does not happen and economic profits can persist. The firm must be able to separate the market into at least two different groups of customers – high demanders, those willing to pay a higher price, and low demanders, those only willing to buy at a much lower price. If the firm can’t do this, they will be unable to identify which group should pay the higher price and which the lower price. 1) The marginal-cost curve intersects the average-total-cost curve at the minimum point of the marginal-cost curve. a.True b.False Answer: 2) In which of the following games is it clearly the case that the cooperative outcome of the game is good for the two players and bad for society? a.Two oil companies own adjacent oil fields … Quick Quizzes. 1. When a competitive firm doubles the amount it sells, the price remains the same, so its total revenue doubles. 2. The price faced by a profit-maximizing firm is equal to its marginal cost because if price were above marginal cost, the firm could increase profits by increasing output, while if price were below marginal cost, the firm could increase profits by decreasing output. A perfectly pricediscriminating monopolist is able to maximize profit and produce a sociallyoptimal level of output.

Question: Question 1 Assume The Figure Applies To A Pure Monopolist And That MC Is The Same For Both Graphs. If This Firm Is Able To Price Discriminate Between Children And Adults, Its Economic Profit Will Be: (P2 - MC) × (Q1C + Q2).

Nov 16, 2006 · The profit-maximizing firm in a perfectly competitive industry faces a horizontal demand curve at the market price. The perfectly elastic demand curve that each firm faces represents the fact that they can sell as much as they want at the market price, since each firm has an insignificant share of the overall market. d. only if the price is at least $6. 21. See Figure QMB. If the price is $6, then in long-run equilibrium, each firm will a. shut down. b. produce 3 units. c. continue to expand. d. earn profits of $9 per period. 22. Suppose the price elasticity of demand for widgets is –1. At a price of $20, a store sells 200 widgets per month. Question 1 Price discrimination occurs when a firm Select one: a. charges the same price, but has different costs of producing the same product. b. charges a different price for the same product based on demand differences. c. is predjudiced against people of certain races and charges higher prices to them. (i) When a perfectly-competitive firm sells an additional unit of output, its revenue increases by an amount less than the price. (ii) When a monopoly firm sells an additional unit of output, its revenue increases by an amount less than the price. (iii) Average revenue is the same as price for both competitive and monopoly firms. a. (i) only b. Why Do Companies Price Discriminate? By Moira McCormick on July 4, 2016 Price discrimination is a pricing strategy that charges customers different prices for identical goods or services according to certain criteria.

25) If a firm is able to perfectly price discriminate instead of using regular monopoly pricing, then A) consumer surplus is increased. B) deadweight loss is increased. C) producer surplus is reduced. D) consumer surplus and deadweight losses are transformed into economic profits. A market is more efficient, and society is better off, whenever a price-making firm is able to price-discriminate, even when consumer surplus is converted to producer surplus. True (Markets in which firms price-discriminate are more efficient because deadweight loss is reduced.) First, the firm needs to have at least some market power. If it has no market power, then it can’t charge different prices for different customers. Second, the firm needs to be able to sort the customers into those willing to pay a higher price and those who are no, but who would be willing to pay a lower price. Question 1 Price discrimination occurs when a firm Select one: a. charges the same price, but has different costs of producing the same product. b. charges a different price for the same product based on demand differences. c. is predjudiced against people of certain races and charges higher prices to them.

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