Assume a Market That Has an Equilibrium Price of $8

question 33

Multiple Choice

Assume a market that has an equilibrium price of $8.If the market price is set at $7,consumer surplus:

• A)rises for some because of the increased price.
• B)decreases for some because of fewer transactions taking place.
• C)Both of these statements are true.
• D)Neither of these statements is true.

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Definitions:

Direct Price Discrimination

A pricing strategy where a business charges different prices to different customers for the same product or service, based on willingness to pay.

Arbitrage

A means to defeat a price discrimination scheme; it occurs when low-value individuals are able to resell their lower-priced goods to the higher-value group.

Low-value Group

A segment of the market or population perceived to have less purchasing power or economic importance.

Direct Price Discrimination

A pricing strategy where a seller charges different prices to different customers for the same product or service, based explicitly on the customer's willingness to pay.