Economics > QUESTIONS & ANSWERS > New York UniversityECONOMICS 100Quiz_165 ALL QUESTIONS AND ANSWERS CORRECT (All)
SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 85) Why is it necessary for a firm that practices price discrimination be a price maker rather than... a price taker? 85) Answer: A price taker has no market power and therefore cannot influence market price. A price maker, on the other hand, is able to influence market price. As long as a seller cannot influence market price, it will not be able to engage in price discrimination. Diff: 2 Page Ref: 523/523 Topic: Price Discrimination Learning Outcome: Micro 14: Discuss production and pricing decisions within monopolies and how public policies affect monopolies AACSB: Analytic Skills 86) What three conditions must hold for a firm to successfully price discriminate? 86) Answer: Successful price discrimination has three requirements: 1. A firm must possess market power. 2. Some consumers must have a greater willingness to pay for the product than others; the firm must know the prices consumers are willing to pay. 3. The firm must be able to segment the market so consumers who buy at a low price cannot resell at a higher price. Diff: 2 Page Ref: 523/523 Topic: Price Discrimination Learning Outcome: Micro 14: Discuss production and pricing decisions within monopolies and how public policies affect monopolies AACSB: Reflective Thinking ESSAY. Write your answer in the space provided or on a separate sheet of paper. 87) Arnoldʹs Airport Transport provides passenger transportation to and from the local airport. Arnold charges a flat rate of $30 per person for round-trip service, and he gives a $5 discount to senior citizens. Assume Arnoldʹs marginal cost is $3.00 per person. Draw two graphs, one showing demand and marginal cost for his $30 customers, of which he has 300 per month, and the other graph showing demand and marginal cost for his senior citizen customers, of which he has 100 per month. If Arnold charged all of his customers $30, he would have 325 customers per month. [Show More]
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