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 +
Chapter13: Monopoly And Antitrust
Section: Chapter Questions
Problem 14P
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
+
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