Figure 11.1.1 -Rather Than Charging a Single Price to All Customers, a Customers

question 39

Multiple Choice

Figure 11.1.1
-Rather than charging a single price to all customers, a firm charges a higher price to men and a lower price to women. By engaging in this practice, the firm:

• A) is trying to reduce its costs and therefore increase its profit.
• B) is engaging in an illegal activity that is prohibited by the Sherman Antitrust Act.
• C) is attempting to convert producer surplus into consumer surplus.
• D) is attempting to convert consumer surplus into producer surplus.
• E) Both A and C are correct.

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Definitions:

Short-Run Equilibrium

The state in which the quantity supplied equals the quantity demanded within a short time frame, often with some factors held constant.

Economic Loss

The monetary value of the decrease in welfare or trade-offs resulting from an economic transaction or decision, beyond just the physical loss.

Product Differentiation

The strategy of setting a product or service apart from others in the industry to enhance its attractiveness to a specific target group.

Allocative Efficiency

A condition of distributing resources in which improving the situation of one person necessitates the detriment of another.