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Chapter 24: Q. 24.4LO (page 535)

Understand price discrimination.

Short Answer

Expert verified

The economic discrepancy occurs when one supplier charges customers a different amount for almost identical goods or services.

Step by step solution

01

Introduction

Price fixing is a marketing approach in which a seller provides various pricing for the same commodity or service to different consumers in order to get the buyer to adjust.

When a seller has clear pure dominance, he or she will give any potential buyer the whole amount of money available.

02

Given Information

  • In a more typical kind of predatory pricing, the seller divides purchasers into subgroups based on specified traits and assigns a different price to each unit.
03

Explanation

  • When a merchant uses price discrimination, he or she charges different prices to different clients for the same product or service.
  • The corporation uses first-degree discrimination to charge the highest feasible price for each unit consumed.
  • Third-degree discrimination reflects varying rates for distinct consumer limbs, whereas second-degree discrimination reflects discounts for items or services purchased in bulk.

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Most popular questions from this chapter

What essential economic conditions must be satisfied for firms to succeed in utilizing big data techniques to engage in price discrimination that increases their profits?

A monopolist's revenues vary directly with price. Is it maximizing its economic profits? Why or why not? (Hint: Recall that the relationship between revenues and price depends on price elasticity of demand.)

Use the following graph to answer the questions that follow,

a. What is the monopolist's profit-maximizing output?

b. At the profit-maximizing output rate, what are average total cost and total revenue ?

c. At the profit-maximizing output rate, what are the monopolist's total cost and total revenue?

d. What is the maximum profit?

e. Suppose that the marginal coot and average total cost curves in the diagram also illustrate the horizontal summation of the firms in a perfectly competitive industry in the long run. What would the equilibrium price and output be if the market were perfectly competitive? Explain the economic cost to society of allowing a monopoly to exist.

A monopolist's maximized rate of economic profits is \(5,000per week. Its weekly output is 500units, and at this output rate, the firm's marginal cost is \)15 per unit. The price at which it sells each unit is $40 per unit. At these profit and output rates, what are the firm's average total cost and marginal revenue?

What is the effect of Overton's barrier to entry on the total quantity of cold drinks sold by the city's food-and-beverage retailing industry?
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