Firms are able to price-discriminate when resale is impossible and groups of individuals are difficult to distinguish. True Click or tap "True" or "False" to answer the question. False A small-town monopolist determines that lowering prices will bring in more customers. Following the price drop, however, the firm discovers that even though the number of customers increased as hoped, the firm's total profit is falling. What could have gone wrong? Correct Answer(s) Drag appropriate answer(s) here The loss in revenue due to the price effect exceeds the gain in revenue due to the output effect. The new price and output level are at a point where MR < MC. + At lower price levels, demand is very elastic, so the price effect is minimized. With the increase in customers, MR is now greater than MC. Incorrect Answer(s) Drag appropriate answer(s) here +
Firms are able to price-discriminate when resale is impossible and groups of individuals are difficult to distinguish. True Click or tap "True" or "False" to answer the question. False A small-town monopolist determines that lowering prices will bring in more customers. Following the price drop, however, the firm discovers that even though the number of customers increased as hoped, the firm's total profit is falling. What could have gone wrong? Correct Answer(s) Drag appropriate answer(s) here The loss in revenue due to the price effect exceeds the gain in revenue due to the output effect. The new price and output level are at a point where MR < MC. + At lower price levels, demand is very elastic, so the price effect is minimized. With the increase in customers, MR is now greater than MC. Incorrect Answer(s) Drag appropriate answer(s) here +
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Please indicated each statement as correct or incorrect..
Transcribed Image Text:Firms are able to price-discriminate when resale is impossible and groups of individuals are
difficult to distinguish.
True
Click or tap "True" or "False" to answer the question.
False
Transcribed Image Text:A small-town monopolist determines that lowering prices will bring in more customers. Following
the price drop, however, the firm discovers that even though the number of customers increased
as hoped, the firm's total profit is falling. What could have gone wrong?
Correct Answer(s)
Drag appropriate answer(s) here
The loss in revenue due to the price effect
exceeds the gain in revenue due to the output
effect.
The new price and output level are at a point
where MR < MC.
+
At lower price levels, demand is very elastic,
so the price effect is minimized.
With the increase in customers, MR is now
greater than MC.
Incorrect Answer(s)
Drag appropriate answer(s) here
+
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education