A Firm Practices Price Discrimination by Selling at a High

question 37

Multiple Choice

A firm practices price discrimination by selling at a high price in its larger market, Market A, and a lower price in its smaller market, Market B. If this firm is forced to sell at a single-price in both markets and opts for the original price in Market A, the new single-pricing strategy makes:

• A) consumers in both Market A and Market B worse off.
• B) consumers in Market A no worse off, but consumers in Market B worse off.
• C) consumers in Market B no worse off, but consumers in Market A worse off.
• D) consumers in both markets better off, as single pricing is always better for consumers than price discrimination.

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Definitions:

Reward Model

A theory or system that outlines how rewards (material or immaterial) are used to motivate behaviors in individuals or groups.

Pleasant Experience

A feeling or a situation that brings joy, satisfaction, or happiness.

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A type of establishment that primarily serves coffee and other hot beverages, often also providing a place for social interaction or work.

Socially Skilled

Having the ability to interact smoothly and effectively with others in a social context.