When a Monopoly Practices Price Discrimination

question 82

Multiple Choice

When a monopoly practices price discrimination

• A)it charges different prices to different consumers and transfers some of the consumer surplus to economic profit.
• B)it produces a smaller quantity than when it is a single-price monopoly which decreases consumer surplus.
• C)new firms enter the industry,so buyers have more goods from which to choose and consumer surplus increases.
• D)consumer surplus increases because the monopoly increases the quantity available for sale.
• E)firms exit the industry and consumer surplus decreases.

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Definitions:

Expansion

A growth strategy where a business increases its scale of operations, typified by entering new markets, increasing product lines, or growing in size.

Earnings Per Share

A measure of a company's profitability, calculated as the net income divided by the number of outstanding shares of its common stock.

Stockholder Control

The influence and authority stockholders have over the management and strategic decisions of a corporation, often exercised through voting rights associated with shares.

State Laws

Laws enacted by individual states within a country, governing within their territories and subject to the constitution of that country.