A Firm Can Effectively Practice Price Discrimination and Increase Profit

question 43

Multiple Choice

A firm can effectively practice price discrimination and increase profit if

• A) the marginal cost of production in each market is different.
• B) the average cost of production in each market is different.
• C) the price elasticity of demand in each market is different.
• D) the product can be produced in two different factories.

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Definitions:

Long Run

A period in economics where all factors of production and costs are variable, allowing all inputs to be adjusted.

Short Run

A period in which at least one factor of production is fixed, limiting the ability of a business to expand its output.

Isoquants

A curve representing all combinations of inputs that give the same level of output.

Production Function

An equation that describes the relationship between inputs and the maximum output that can be produced.