The Key Idea Behind Price Discrimination Is to Convert Consumer

question 38

Multiple Choice

The key idea behind price discrimination is to convert consumer surplus into

• A) deadweight loss.
• B) a barrier to entry.
• C) economic profit.
• D) total cost.
• E) monopoly power.

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Definitions:

Diminishing Returns

A principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase and may even decrease.

Diseconomies of Scale

A phenomenon where production costs per unit increase as a firm's output increases, often due to inefficiencies that arise when companies become too large.

Smaller Percentage Increase

Refers to a rate of increase that is less significant or lower in proportion compared to another.

Average Costs

The cost per unit of output, calculated by dividing the total cost of production by the number of units produced.