Exam 14: Price Discrimination

Even when gas stations and grocery stores are close enough to share a parking lot, gas stations will typically charge much more for candy bars. This kind of price discrimination occurs because grocery store patrons have a:

Bundling is sometimes a form of price discrimination, but not necessarily always a form of price discrimination.

If a firm can practice perfect price discrimination, its profits will always rise.

Compared to a single price for all markets, price discrimination can make some consumers better off and others worse off.

Use the following to answer questions: Figure: Monopolist -(Figure: Monopolist) Refer to the figure. Based on the demand curves for a monopolist's product in two different markets-Market A and Market B-what price should the monopolist charge in Market B?

In markets where consumers are price insensitive, price discriminators should charge higher prices than in markets where consumers are price sensitive.

Printers and color printer ink are typically:

A monopolist faces a demand function given by P = 100 - Q and a corresponding marginal revenue function of MR = 100 - 2Q. The average and marginal costs of production are constant at $20. a. How many units of output does the monopolist produce if setting a single price? b. Suppose that the monopolist practices perfect price discrimination. How many units of output will the monopolist now produce?

A Culligan faucet filter sells for $18, while other replacement filters (that avoid warranty) sell for $12. What strategy is Culligan using?

Adults have more money than teenagers and perhaps more inelastic demand for video games than teenage video gamers. Why might it be difficult to price discriminate based on this fact?

U.S. public universities price discriminate most directly according to:

Segmenting a market allows monopolists to:

Corresponding to the practice of price discrimination, Williams College offers different levels of financial aid to students based on students':

How does price discrimination increase social surplus?

One would expect more arbitrage to occur between two markets if:

In the absence of price discrimination,:

What conditions are necessary for a firm to practice price discrimination?

Use the following to answer questions: Figure: Perfect Price Discrimination -(Figure: Perfect Price Discrimination) Refer to the figure. For a firm practicing perfect price discrimination, calculate the dollar amount of consumer surplus in this market.

Perfect price discrimination results in zero dollars of consumer surplus.

Price discrimination is bad if total surplus increases with a decrease in output.