Refer to Figure 16-2. Suppose Plato Playhouse price discriminates. Which of the following statements is true?
A) By charging two different prices, the theatre company has redistributed some profits from those who can pay higher prices to those who cannot, thereby increasing economic efficiency.
B) By charging two different prices, the theatre company essentially allows those willing to pay higher prices to subsidize those who are not.
C) Plato Playhouse will earn higher profits if it charges a single price—an average of the two prices— instead of charging two different prices to the two different groups of customers.
D) By charging two different prices, the theatre company has redistributed some profits from those who can pay higher prices to those who cannot, thereby improving equity.
B
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Why do some firms practice price discrimination? Relate your answer to the common practice of public colleges charging lower tuition to in-state students and higher tuition to out-of-state students
What will be an ideal response?
Government purchases, under the expenditure approach to GDP accounting, do not include: a. state government purchases of plumbing services. b. Social Security benefit payments to retirees
c. the salaries of military officers. d. federal government purchases of computers.