Solution Found!
Monopolies & Price Discrimination: Myths, Truths & Insights
Chapter 0, Problem 1(choose chapter or problem)
True or false? Explain your answer.
a. A single-price monopolist sells to some customers that would not find the product affordable if purchasing from a price-discriminating monopolist.
b. A price-discriminating monopolist creates more inefficiency than a single-price monopolist because it captures more of the consumer surplus.
c. Under price discrimination, a customer with highly elastic demand will pay a lower price than a customer with inelastic demand.
Questions & Answers
QUESTION:
True or false? Explain your answer.
a. A single-price monopolist sells to some customers that would not find the product affordable if purchasing from a price-discriminating monopolist.
b. A price-discriminating monopolist creates more inefficiency than a single-price monopolist because it captures more of the consumer surplus.
c. Under price discrimination, a customer with highly elastic demand will pay a lower price than a customer with inelastic demand.
ANSWER:Step 1 of 3
A monopoly is where there's only one seller in the market. For instance, imagine a town with only one water supplier—that's a monopoly. Price discrimination is when the same product is sold at different prices to different consumers. Like when airlines charge different prices for the same seat based on booking time.
a. A single-price monopolist sells to some customers that would not find the product affordable if purchasing from a price-discriminating monopolist
The answer is false. Consider a movie theatre (a price-discriminating monopolist) that sells tickets at reduced prices for seniors and students—groups that might not afford full-priced tickets sold by a single-price monopolist.
Watch The Answer!
Monopolies & Price Discrimination: Myths, Truths & Insights
Want To Learn More? To watch the entire video and ALL of the videos in the series:
Explore the intricacies of monopolies and price discrimination in the market. Unpack myths and truths about consumer behavior and pricing strategies. Real-life examples illuminate these fundamental economic concepts.