Use the Following to Answer Questions

question 80

Multiple Choice

Use the following to answer questions:
Figure: PPD
-(Figure: PPD) Refer to the figure. Which of the following statements best explains why a firm that perfectly price discriminates would sell additional units beyond c units of output?

• A) If the firm can perfectly price discriminate it can charge a price equal to the consumers' willingness to pay, which for all units beyond c is higher than the firm's marginal cost for those units.
• B) The firm will continue to increase profits as long as consumers' willingness to pay is greater than zero.
• C) A firm will not sell beyond c units of output. The marginal cost is greater than consumers' willingness to pay for these units.
• D) A firm will not sell beyond c units of output. The marginal cost is greater than the firm's marginal revenue for these units.

---

Definitions:

Returns To Scale

Describes how output changes in response to a proportional change in all input factors used in production.

Production Function

This concept illustrates how varying amounts of input factors affect the level of production output, showcasing how efficiency can be maximized with certain combinations of inputs.

Output

The quantity of goods or services produced in a given time period by a firm, industry, or country.

Production Function

A mathematical model that describes the relationship between input resources and the output of goods or services produced.