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Answer to Question #52947 in Microeconomics for Yana

Question #52947
multiple choice
1. The strategy underlying price discrimination is to:
a. charge higher prices to customers who have better access to substitutes.
b. charge everyone the same price but limit the quantity they are allowed to buy.
c. increase total revenue by charging higher prices to those with the most inelastic demand
for the product and lower prices to those with the most elastic demand.
d. reduce per-unit costs by charging higher prices to those with the most elastic demand and
lower prices to those with the most inelastic demand.

2. For a monopolist to practice price discrimination, one necessary condition is that the product offered for sale must be:
a. high quality.
b. expensive.
c. cheap.
d. impossible or difficult to resell.

Expert's answer
multiple choice
 1. The strategy underlying price discrimination is to:
 a. charge higher prices to customers who have better access to substitutes.
 b. charge everyone the same price but limit the quantity they are allowed to buy.
 c. increase total revenue by charging higher prices to those with the most inelastic demand  for the product and lower prices to those with the most elastic demand.
 d. reduce per-unit costs by charging higher prices to those with the most elastic demand and  lower prices to those with the most inelastic demand.
 2. For a monopolist to practice price discrimination, one necessary condition is that the product offered for sale must be:
 a. high quality.
 b. expensive.
 c. cheap.
 d. impossible or difficult to resell.
Solution
1. The strategy underlying price discrimination is to:
 a. charge higher prices to customers who have better access to substitutes.
 b. charge everyone the same price but limit the quantity they are allowed to buy.
 c. increase total revenue by charging higher prices to those with the most inelastic demand  for the product and lower prices to those with the most elastic demand.
 d. reduce per-unit costs by charging higher prices to those with the most elastic demand and  lower prices to those with the most inelastic demand.
Answer - C
 2. For a monopolist to practice price discrimination, one necessary condition is that the product offered for sale must be:
 a. high quality.
 b. expensive.
 c. cheap.
 d. impossible or difficult to resell.
Answer - D

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