For a Firm to Price Discriminate, It Must

question 229

Multiple Choice

For a firm to price discriminate, it must

• A) sell to customers with identical price elasticities of demand.
• B) produce a product or service that has a close substitute provided by other firms.
• C) be able to prevent the resale of its product.
• D) have different marginal costs for each of the different customers.

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Definitions:

Monopsonist

A market condition where there is only one buyer or a dominant buyer for a product or service, giving them significant power over prices.

Bilateral Monopoly Wage Rate

refers to the wage rate determined in a market where there is only one employer (a monopoly) and one union or employee (a monopsony), necessitating negotiation to reach an agreement on wages.

Perfectly Inelastic Supply

A market condition where the quantity supplied remains constant regardless of changes in price.

Bargaining Power

The relative capacity of parties in a negotiation to exert influence over each other, affecting the terms of the agreement.