Whether the price discriminating seller charges the price lower than the marginal cost.

Question

Want to see more full solutions like this?

Answer 1

Question

Chapter 14, Problem 1FT

To determine

Whether the price discriminating seller charges the price lower than the marginal cost.

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are buyers and sellers who sell and the exchange of goods and services take place between them. The price is determined by the interaction of the demand and supply in the market. The consumer decides to demand a commodity on the basis of the utility received from the commodity. The utility is the measure of satisfaction that the consumer receives from the consumption of the commodity or the service. The additional utility received from the consumption of an additional unit of the commodity is known as the marginal utility.

However, the case with the marginal cost and price is obvious. The profit maximizing seller would always charge a higher price than the marginal cost of production to all the consumers. When the case of the price discrimination is concerned, the producer would charge a little more than the marginal cost to some consumers, whereas a lot more than the marginal cost to some other consumers. The ultimate aim of the sellers is to maximize their profit and it has nothing to do with charging a price level lower than the marginal cost. Thus, the statement is wrong.

Economics Concept Introduction

Concept introduction:

Price discrimination: The price discrimination is the practice of charging different price for the exact same commodity for different consumers in the market.

Marginal Cost: The marginal cost is the additional cost incurred while producing one more additional unit of the commodity.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Students have asked these similar questions

Environmental Economics

1. The current price for a barrel of oil is $28. Assume the marginal extraction cost per barrel is $8 and the interest rate is 4 percent per year. a. According to the standard Hotelling model for a nonrenewable resource, what is the forecasted price for next year? b. How would your forecast change (qualitatively) if the demand for oil increased before next year?

Answer 2

Question

Chapter 14, Problem 1FT

To determine

Whether the price discriminating seller charges the price lower than the marginal cost.

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are buyers and sellers who sell and the exchange of goods and services take place between them. The price is determined by the interaction of the demand and supply in the market. The consumer decides to demand a commodity on the basis of the utility received from the commodity. The utility is the measure of satisfaction that the consumer receives from the consumption of the commodity or the service. The additional utility received from the consumption of an additional unit of the commodity is known as the marginal utility.

However, the case with the marginal cost and price is obvious. The profit maximizing seller would always charge a higher price than the marginal cost of production to all the consumers. When the case of the price discrimination is concerned, the producer would charge a little more than the marginal cost to some consumers, whereas a lot more than the marginal cost to some other consumers. The ultimate aim of the sellers is to maximize their profit and it has nothing to do with charging a price level lower than the marginal cost. Thus, the statement is wrong.

Economics Concept Introduction

Concept introduction:

Price discrimination: The price discrimination is the practice of charging different price for the exact same commodity for different consumers in the market.

Marginal Cost: The marginal cost is the additional cost incurred while producing one more additional unit of the commodity.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 3

Question

Chapter 14, Problem 1FT

To determine

Whether the price discriminating seller charges the price lower than the marginal cost.

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are buyers and sellers who sell and the exchange of goods and services take place between them. The price is determined by the interaction of the demand and supply in the market. The consumer decides to demand a commodity on the basis of the utility received from the commodity. The utility is the measure of satisfaction that the consumer receives from the consumption of the commodity or the service. The additional utility received from the consumption of an additional unit of the commodity is known as the marginal utility.

However, the case with the marginal cost and price is obvious. The profit maximizing seller would always charge a higher price than the marginal cost of production to all the consumers. When the case of the price discrimination is concerned, the producer would charge a little more than the marginal cost to some consumers, whereas a lot more than the marginal cost to some other consumers. The ultimate aim of the sellers is to maximize their profit and it has nothing to do with charging a price level lower than the marginal cost. Thus, the statement is wrong.

Economics Concept Introduction

Concept introduction:

Price discrimination: The price discrimination is the practice of charging different price for the exact same commodity for different consumers in the market.

Marginal Cost: The marginal cost is the additional cost incurred while producing one more additional unit of the commodity.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 4

Question

Chapter 14, Problem 1FT

To determine

Whether the price discriminating seller charges the price lower than the marginal cost.

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are buyers and sellers who sell and the exchange of goods and services take place between them. The price is determined by the interaction of the demand and supply in the market. The consumer decides to demand a commodity on the basis of the utility received from the commodity. The utility is the measure of satisfaction that the consumer receives from the consumption of the commodity or the service. The additional utility received from the consumption of an additional unit of the commodity is known as the marginal utility.

However, the case with the marginal cost and price is obvious. The profit maximizing seller would always charge a higher price than the marginal cost of production to all the consumers. When the case of the price discrimination is concerned, the producer would charge a little more than the marginal cost to some consumers, whereas a lot more than the marginal cost to some other consumers. The ultimate aim of the sellers is to maximize their profit and it has nothing to do with charging a price level lower than the marginal cost. Thus, the statement is wrong.

Economics Concept Introduction

Concept introduction:

Price discrimination: The price discrimination is the practice of charging different price for the exact same commodity for different consumers in the market.

Marginal Cost: The marginal cost is the additional cost incurred while producing one more additional unit of the commodity.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!

Answer 5

Chapter 14, Problem 1FT

To determine

Whether the price discriminating seller charges the price lower than the marginal cost.

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are buyers and sellers who sell and the exchange of goods and services take place between them. The price is determined by the interaction of the demand and supply in the market. The consumer decides to demand a commodity on the basis of the utility received from the commodity. The utility is the measure of satisfaction that the consumer receives from the consumption of the commodity or the service. The additional utility received from the consumption of an additional unit of the commodity is known as the marginal utility.

However, the case with the marginal cost and price is obvious. The profit maximizing seller would always charge a higher price than the marginal cost of production to all the consumers. When the case of the price discrimination is concerned, the producer would charge a little more than the marginal cost to some consumers, whereas a lot more than the marginal cost to some other consumers. The ultimate aim of the sellers is to maximize their profit and it has nothing to do with charging a price level lower than the marginal cost. Thus, the statement is wrong.

Economics Concept Introduction

Concept introduction:

Price discrimination: The price discrimination is the practice of charging different price for the exact same commodity for different consumers in the market.

Marginal Cost: The marginal cost is the additional cost incurred while producing one more additional unit of the commodity.

Answer 6

Chapter 14, Problem 1FT

To determine

Whether the price discriminating seller charges the price lower than the marginal cost.

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are buyers and sellers who sell and the exchange of goods and services take place between them. The price is determined by the interaction of the demand and supply in the market. The consumer decides to demand a commodity on the basis of the utility received from the commodity. The utility is the measure of satisfaction that the consumer receives from the consumption of the commodity or the service. The additional utility received from the consumption of an additional unit of the commodity is known as the marginal utility.

However, the case with the marginal cost and price is obvious. The profit maximizing seller would always charge a higher price than the marginal cost of production to all the consumers. When the case of the price discrimination is concerned, the producer would charge a little more than the marginal cost to some consumers, whereas a lot more than the marginal cost to some other consumers. The ultimate aim of the sellers is to maximize their profit and it has nothing to do with charging a price level lower than the marginal cost. Thus, the statement is wrong.

Economics Concept Introduction

Concept introduction:

Price discrimination: The price discrimination is the practice of charging different price for the exact same commodity for different consumers in the market.

Marginal Cost: The marginal cost is the additional cost incurred while producing one more additional unit of the commodity.

Answer 7

Chapter 14, Problem 1FT

To determine

Whether the price discriminating seller charges the price lower than the marginal cost.

Answer 8

Expert Solution & Answer

Explanation of Solution

The market is a structure where there are buyers and sellers who sell and the exchange of goods and services take place between them. The price is determined by the interaction of the demand and supply in the market. The consumer decides to demand a commodity on the basis of the utility received from the commodity. The utility is the measure of satisfaction that the consumer receives from the consumption of the commodity or the service. The additional utility received from the consumption of an additional unit of the commodity is known as the marginal utility.

However, the case with the marginal cost and price is obvious. The profit maximizing seller would always charge a higher price than the marginal cost of production to all the consumers. When the case of the price discrimination is concerned, the producer would charge a little more than the marginal cost to some consumers, whereas a lot more than the marginal cost to some other consumers. The ultimate aim of the sellers is to maximize their profit and it has nothing to do with charging a price level lower than the marginal cost. Thus, the statement is wrong.

Answer 9

Expert Solution & Answer

Answer 10

Expert Solution & Answer

Answer 11

Economics Concept Introduction

Concept introduction:

Price discrimination: The price discrimination is the practice of charging different price for the exact same commodity for different consumers in the market.

Marginal Cost: The marginal cost is the additional cost incurred while producing one more additional unit of the commodity.

Answer 12

Ch. 14 - Prob. 1FT Ch. 14 - Prob. 2FT Ch. 14 - Prob. 3FT Ch. 14 - Prob. 4FT Ch. 14 - Prob. 5FT Ch. 14 - Prob. 6FT Ch. 14 - Prob. 7FT Ch. 14 - Prob. 8FT Ch. 14 - Prob. 9FT Ch. 14 - Prob. 1TPS

Whether the price discriminating seller charges the price lower than the marginal cost.

Concept explainers

Whether the price discriminating seller charges the price lower than the marginal cost.

Explanation of Solution

Want to see more full solutions like this?

Chapter 14 Solutions