Reference: Ref 14-3 (Figure: PPD) Refer to the Figure

question 145

Multiple Choice

Reference: Ref 14-3 (Figure: PPD) Refer to the figure. Which of the following statements best explains why a firm that perfectly price discriminates would sell additional units beyond a units of output?

• A) A firm will not sell beyond a units of output. The firm will only sell exactly a, as it is the profit-maximizing rate of output for this firm.
• B) The marginal cost is less than consumers' willingness to pay for these units.
• C) The marginal cost is greater than consumers' willingness to pay for these units.
• D) A firm will not sell beyond a units of output, since the marginal cost is greater than the marginal revenue for these units.

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Definitions:

Superstars Pay

Refers to the significantly high salaries or earnings of top performers or individuals in specific industries such as sports, entertainment, and business due to their exceptional skill, talent, or marketability.

Marginal Revenue Productivity

The additional revenue generated by employing one more unit of a given resource or factor of production.

Elastic Product Demand

A situation where the demand for a product is sensitive to changes in price, meaning small price changes can cause large changes in quantity demanded.

Economic Profits

Profits that exceed the opportunity costs of all resources employed by the firm, reflecting earnings above the normal expected return.