ECON 2020 12c Price Discrimination and Market Regulation

Multiple Choice

Which of the following best describes how a monopolist maximizes profit?

• By producing where marginal revenue equals marginal cost

• By producing as much as possible

• By charging the lowest possible price

• By matching the price of competitors

Multiple Choice

Which of the following is a reason why governments might intervene in markets according to the key ideas presented?

• To maximize social surplus for monopolies

• To eliminate price discrimination

• To protect competition or regulate monopolies

• To increase deadweight loss

Multiple Choice

Compare the surplus allocations for a monopoly with one price and with perfect price discrimination as shown in the second image. What is the main difference in terms of producer and consumer surplus?

• Producer surplus increases and deadweight loss disappears with perfect price discrimination

• Consumer surplus increases with perfect price discrimination

• Deadweight loss increases with perfect price discrimination

• Producer surplus decreases with perfect price discrimination

Multiple Choice

Which of the following is an example of second-degree price discrimination as illustrated in the images?

• Bulk discounts for buying more units

• Student discounts at theaters

• Senior citizen discounts

• Different prices in different cities

Open Ended

How does allowing buyers to resell to other buyers affect the outcome of price discrimination?

Multiple Choice

Which of the following statements about third-degree price discrimination is correct?

• The seller sets a single price for all buyers

• The seller sets different prices for different groups of buyers

• The seller cannot distinguish between buyers

Multiple Select

Select all that apply: Which of the following are examples of third-degree price discrimination?

• Student discounts

• Bulk purchase discounts

• Senior citizen discounts

• Theater matinee discounts

Multiple Choice

What is one key difference between a monopolist and a perfectly competitive seller?

• A monopolist is a price-taker, while a perfectly competitive seller is a price-maker.

• A monopolist produces where marginal revenue equals marginal cost, while a perfectly competitive seller does not.

• A monopolist produces a lower quantity and charges a higher price than a perfectly competitive seller.

• A monopolist always results in no deadweight loss.