When a Firm Engages in Perfect Price Discrimination

question 203

Multiple Choice

When a firm engages in perfect price discrimination,

• A)marginal revenue is equal to price
• B)marginal revenue is below price
• C)marginal revenue is below marginal cost
• D)profits are reduced relative to a single-price monopolist
• E)rent-seeking behavior must occur

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Definitions:

Px(MUx)

This expression denotes the price of a good (Px) multiplied by its marginal utility (MUx), commonly used in economic analysis of consumer choice.

MUx/MUy

Represents the marginal utility of good x relative to the marginal utility of good y, often used in consumer choice theory to analyze optimum consumption points.

TUx/Px

An economic expression evaluating the marginal rate of substitution, which measures how much of one good a consumer is willing to give up for another good, maintaining a constant level of utility.

Marginal Utility

The extra pleasure or advantage gained from using another unit of a product or service.