(Figure: PPD) Refer to the Figure

question 1

Multiple Choice

(Figure: PPD) Refer to the figure. Which of the followingstatements best explains why a firm that perfectly pricediscriminates would sell additional units beyond a units ofoutput?

• 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:

Price Elasticity

A measure of how much the quantity demanded of a good responds to a change in the price of that good, expressed as a percentage change.

Excise Tax

A tax levied on specific goods or commodities sold within a country, such as alcohol and cigarettes.

Price Elasticity

A parameter for gauging the response of demand to price variations of a product.

Excise Tax

A tax levied on the sale or consumption of specific goods or services, such as alcohol, tobacco, and gasoline.