Answer the following statements true (T) or false (F)
1. One of the economic effects of monopoly is an income transfer from consumers to the firm.
2. Price discrimination is not viable if consumers can resell the products they purchase.
3. In most cases, a monopolist practicing price discrimination will end up earning less economic profits than a non-discriminating monopolist.
4. A price-discriminating monopolist will set a higher price where demand is more elastic and a lower price where demand is less elastic.
5. In a natural monopoly case, the socially-optimal pricing policy rule will often yield a higher price than the fair-return pricing rule.
1. TRUE
2. TRUE
3. FALSE
4. FALSE
5. FALSE
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Which of the following will cause the average cost curve of making cigarettes to shift?
A) a $5 million penalty charged to each cigarette maker B) a $1 per pack tax on cigarettes C) a $1 an hour wage increase paid to all cigarette production workers D) All of the above
A leftward shift of a supply curve is called a(n):
a. decrease in demand. b. increase in supply. c. decrease in supply. d. increase in quantity supplied. e. decrease in quantity supplied.