Price Discrimination Is a Rational Strategy for a Profit-Maximizing Monopolist

question 226

Multiple Choice

Price discrimination is a rational strategy for a profit-maximizing monopolist when

• A)the monopolist finds itself able to produce only limited quantities of output.
• B)consumers are unable to be segmented into identifiable markets.
• C)the monopolist wishes to increase the deadweight loss that results from profit-maximizing behavior.
• D)there is no opportunity for arbitrage across market segments.

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Definitions:

Tax on Buyers

A fiscal charge imposed directly on purchasers, which shifts the demand curve downward, reflecting a decrease in the net price received by sellers.

Tax Burden

The measurement of taxes that a person or business must pay, often expressed as a percentage of income or profit.

Buyer Pays

Refers to the economic principle that the buyer is responsible for paying the price of a good or service, including any taxes or fees associated with the purchase.

Tax Equally

A fiscal policy where taxes are imposed at the same rate or level for all individuals or entities, regardless of other factors.