What is perfect price discrimination and why do economists believe that no firm is able to practice perfect price discrimination?
What will be an ideal response?
Perfect price discrimination, also known as first-degree price discrimination, occurs when a firm knows every consumer's willingness to pay and is able to charge every consumer a different price - the maximum price each is willing to pay. The firm's marginal revenue curve in this situation is the same as its demand curve and the firm converts all potential consumer surplus into profits. It is highly unlikely that any firm would be able to use yield management to determine each consumer's maximum willingness to pay. It is also unlikely that if the firm charged each consumer a different price it would prevent arbitrage, where a consumer who bought the product at a low price could sell the product to another consumer with a higher willingness to pay.
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The average total cost curves for plants A, B, C, and D are shown in the above figure. The plant size that is the most economically efficient
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In the Harrod-Domar model, if the savings rate is 20% and the incremental capital output ratio is five, abstracting from depreciation, what is the implied growth rate?
What will be an ideal response?