What is the key characteristic of profit maximizing price discrimination that distinguishes intertemporal price discrimination from peak-load pricing?
A) Peak-load pricing does not require MC = MR.
B) Marginal revenue may be different across different groups of buyers under intertemporal price discrimination.
C) Marginal costs are independent across time periods under peak-load pricing.
D) Marginal revenue must be constant under both pricing schemes.
C
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Every dollar added to the total reserves of the commercial banking system
A) compels the banks to reduce their loans by more than a dollar. B) compels the banks to expand their loans by more than a dollar. C) enables the banks to expand their loans by more than a dollar. D) enables the banks to expand their loans by one dollar. E) is one less dollar in the hands of the public.
In order to be binding, a price floor
A) must lie below the free-market equilibrium price. B) must coincide with the free-market equilibrium price. C) must be high enough for firms to earn a profit. D) must lie above the free-market equilibrium price.