Refer to the Graph Shown

question 139

Multiple Choice

Refer to the graph shown. The firm in this monopolistically competitive industry will:

• A) earn economic profits of $70,000 per year.
• B) earn economic profits of $140,000 per year.
• C) incur economic losses of $140,000 per year.
• D) incur economic losses of $70,000 per year.

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Definitions:

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different buyers, not based on costs.

Ethical Dilemma

A situation in which a difficult choice has to be made between two or more options, especially ones that are morally right but in conflict.

Tie-In Sales

A sales technique where customers are required or encouraged to buy a second, related product when purchasing the first one.

Tie-In Sale

Prohibited under the Clayton Act, it occurs when a buyer is required to buy other, unwanted products in order to buy a particular line of merchandise.