If Price Discrimination Occurs in a Market

question 3

Multiple Choice

If price discrimination occurs in a market,

• A)the law of one price does not hold.
• B)the firm earns arbitrage profits.
• C)consumers whose demand for the product sold is more elastic pay higher prices than consumers whose demand is less elastic.
• D)the marginal cost of production is constant.

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Definitions:

Private Wage

Private wage is the compensation or salary paid to employees by private sector firms, as opposed to wages paid by government entities.

Nonunion Labor

Workers who are not members of a labor union and do not receive the wages and benefits negotiated by unions.

Foreign Firms

Companies that conduct business or operations outside their country of origin.

Union Membership

The state of being a registered member of an organized labor union, representing workers in specific industries or professions.