A Group Price Discriminator Sells Its Product in Florida for Three

question 125

Multiple Choice

A group price discriminator sells its product in Florida for three times the price it sets in New York.Assuming the firm faces the same constant marginal cost in each market and the price elasticity of demand in New York is -2.0,the demand in Florida

• A) has an elasticity of -6.0.
• B) is more price elastic than the demand in New York.
• C) has an elasticity of -1.2.
• D) has an elasticity of -0.67.

Identify the demand and marginal revenue curve characteristics for monopolistically competitive firms.

Understand the implications of monopolistic competition on resource efficiency and market outcomes.

Recognize the conditions for long-run equilibrium in monopolistically competitive markets, including the relation between price, average total cost, and output.

Analyze the elasticity of demand as it relates to market entry and competitiveness.

---

Definitions:

Ricardian Trade Theory

An economic theory that suggests international trade is driven by comparative advantage, leading countries to specialize in the production of goods they can produce most efficiently.

International Product Life Cycle

A theory that suggests that the level of trade in a product at any given time is a function of the current stage in the product’s life cycle, in which the life cycle consists of introduction, maturity, standardization, and decline.

Introduction Stage

The initial phase in the life cycle of a product or service where it is first launched into the market, characterized by promotional activity and gradual growth in sales.

Capital Intensity

The amount of fixed or real capital present in relation to other factors of production, especially labor.