A Monopolist Can Perfectly Price Discriminate

question 8

Multiple Choice

A monopolist can perfectly price discriminate

• A) When it can distinguish consumers with a high versus low willingness to pay
• B) When it offers a menu of alternatives, designed so that different customers will make different choices based on their willingness to pay
• C) If it knows perfectly the customer's willingness to pay for each unit its sells and can charge a different price for each unit
• D) When it cannot distinguish consumers with a high versus low willingness to pay

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Definitions:

LRAC Curves

Long-Run Average Cost curves, which show the average cost per unit of output when all inputs, including capital, are variable, illustrating economies or diseconomies of scale.

Long-Run Adjustment

The process by which firms adjust their production capacity and input usage to new market conditions over time, beyond short-term fluctuations.

Returns To Scale

Rate at which output increases as inputs are increased proportionately.

Increasing Marginal Product

A situation where each additional unit of input results in an increased amount of output.