Relative to Single Price Policy Third Degree Price Discrimination

question 8

Multiple Choice

Relative to single price policy third degree price discrimination

• A)always reduces welfare.
• B)always increases welfare.
• C)may increase welfare if total output falls.
• D)may increase welfare if total output rises.

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Definitions:

Price Level

A mean value of present prices for all goods and services in the economy, indicating the level of inflation or deflation.

Quantity of Output

The total amount of a particular good or service that is produced by a firm or economy.

Long-Run Equilibrium

A state in which all factors of production and costs are variable, and firms in the market are making zero economic profit, indicating no incentive for entry or exit from the market.

Price Levels

An aggregate average of current prices for goods and services in the economic sector.