When a Firm Price-Discriminates Among Consumers with Different Price Elasticities

question 134

Multiple Choice

When a firm price-discriminates among consumers with different price elasticities of demand, it

• A)has the same price-cost margin in each market.
• B)sets up an auction to determine who will pay the most.
• C)maximizes profit in one market while taking losses in another.
• D)equates price and marginal cost in each market.
• E)creates a deadweight loss in each market.

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Definitions:

Max Weber

A German sociologist, philosopher, and political economist whose works significantly contributed to the development of social science and the study of sociology and capitalism.

Rationality

The quality of being based on or in accordance with reason or logic, often used to describe decisions or behaviors that are sensible and well thought out.

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