A Firm Practices Price Discrimination by Selling at a High

question 54

Multiple Choice

A firm practices price discrimination by selling at a high price in its larger market, Market A, and a lower price in its smaller market, Market B. If this firm is forced to sell at a single price in both markets and opts for the original price in Market A, the new single-pricing strategy makes consumers in:

• A) both Market A and Market B worse off.
• B) Market A no worse off but consumers in Market B worse off.
• C) Market B no worse off but consumers in Market A worse off.
• D) both markets better off, as single pricing is always better for consumers than price discrimination.

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Definitions:

Compensate

involves providing something, often money, in exchange for a service or to make amends for loss.

Founders

Founders are individuals who establish and initially lead a business or organization, setting its mission, vision, and strategies.

Ventures

Entrepreneurial projects or businesses started by individuals or groups, often involving risk.

Venture Capital

Funding given by investors to small businesses and startups deemed to have significant potential for long-term growth.