Which Is True of a Price-Discriminating Pure Monopolist

question 185

Multiple Choice

Which is true of a price-discriminating pure monopolist?

• A) P > MR for the last unit sold.
• B) Profit will be higher than in the nondiscriminating case.
• C) The average price will be higher than in the nondiscriminating case.
• D) Allocative inefficiency will be greater than in the nondiscriminating case.

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Definitions:

Securities

Financial instruments that represent an ownership position in a publicly-traded corporation, a creditor relationship with a governmental body or a corporation, or rights to ownership as represented by an option.

Nonsystematic Risk

Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk, firm-specific risk, or diversifiable risk. Systematic risk refers to risk factors common to the entire economy.

Diversifiable Risk

Nonmarket or firm-specific risk factors that can be eliminated by diversification. Also called unique risk, firm-specific risk, or nonsystematic risk. Nondiversifiable risk refers to systematic or market risk.

Market Risk

Also known as systemic risk, it's the potential for investors to experience losses due to factors that affect the overall performance of the financial markets.