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1. If a firm practices first-degree (perfect) price discrimination, it must be TRUE that the firm:
has customers with identical demand curves.
has complete information about each customer's unique demand curve before the customer buys the product.
can identify each customer's demand curve after the customer's purchase of the product.
lacks market power but knows how its customers differ by their willingness to pay for the product.
2. Price discrimination is motivated by the firm's desire to:
penalize customers who do not match the racial/ethnic profile of the firm.
reduce the deadweight loss attributable to monopoly pricing.
effect social justice through long-run sustainable pricing strategies that benefit all community stakeholders.
increase producer surplus.
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You are the manager of a monopolistically competitive firm. The present inverse demand curve you face is P = 100 – 4Q (MR = 100 – 8R). Your cost function is C(Q) = 50 + 8.5Q2 and MC(Q) = 17Q. What level of output should you choose to maximize profits..
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For the next three questions we will consider Sante Bank, which has the following (partial) list of accounts on its balance sheet:
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