Bars often offer specials on appetizers during "happy hour." What does the concept of price discrimination suggest about why this might be profit-maximizing behavior?
What will be an ideal response?
People might have more elastic demand for appetizers during times when they could easily go home and eat dinner and less elastic demand for appetizers during the evening hours after dinner.
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Which of the following is NOT an example of a monopolistically competitive market?
A) high fashion clothing B) medical care C) wheat D) automobiles
A firm has two customers with non-identical demands and a constant marginal cost of production. At any positive price, the consumer surplus values for the two customers are related as CS2 ? CS1
What can we say about the optimal two-part tariff for the firm? A) The firm sets the price equal to MC and the optimal tariff is equal to CS2. B) The firm sets the price equal to MC and the optimal tariff is equal to CS1. C) The firm sets the price equal to MC and the optimal tariff is equal to zero. D) The optimal price is greater than MC and the optimal tariff is equal to CS1.