Price Discrimination,if Possible,allows a Price- Setting Firm to Increase Its

question 21

Multiple Choice

Price discrimination,if possible,allows a price- setting firm to increase its profits by

• A)shifting its cost curves downward.
• B)charging different prices according to the different marginal cost on each unit.
• C)raising the price above the competitive price.
• D)charging different prices according to the willingness to pay of each consumer.
• E)reducing costs through a reduction in output.

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Definitions:

Marginal Product

The additional output that can be produced by adding one more unit of a specific input, keeping all other inputs constant.

Production Possibilities

The different combinations of goods and services that an economy can produce given its available resources and technology.

Average Product

A metric that measures output per unit of a variable input, calculated by dividing total production by the quantity of the variable input.

Diminishing Marginal Returns

A principle stating that as additional units of a variable input are added to a fixed input, the additional output produced from each new unit decreases beyond a certain point.