When a Monopolist Is Able to Price-Discriminate

question 144

Multiple Choice

When a monopolist is able to price-discriminate:

• A) its profits tend to increase and its output tends to fall.
• B) both its profits and output tend to increase.
• C) both its profits and output tend to decrease.
• D) its profits tend to fall and its output tends to increase.

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Definitions:

Short-Run Aggregate Supply Curve

A graphical representation that shows the relationship between the total supply of goods and services produced by an economy at various price levels in the short term.

Expansionary Gap

A condition in which the actual output of an economy surpasses the level of output at full employment, commonly resulting in inflation.

Real GDP

Gross Domestic Product adjusted for inflation, reflecting the value of all goods and services produced by an economy in a given year in real terms.

Nominal GDP

The total market value of all goods and services produced within a country’s borders in a given period without adjusting for inflation.