Which of the following is true of perfect price discrimination compared to charging a single price?
a. Output is greater.
b. Output is the same, but profit is higher.
c. Output is lower, but profit is higher.
d. Output is lower, and profit could be higher or lower.
e. Output is the same, but profit is lower.
QUESTION 2There are six firms in the cresset industry. The market shares of the four largest firms are 50 percent, 20 percent, 10 percent, and 7 percent. The Herfindahl index is
a. 87
b. 4,149
c. 10,000
d. 3,081
e. impossible to calculate because data for the fifth and sixth firms are not given
QUESTION 3Suppose a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly increases. What happens to the typical firm in the long run?
a. It experiences no change from the original equilibrium
b. It experiences a higher average total cost and equilibrium price
c. It experiences a lower average total cost and equilibrium price
d. It experiences the same equilibrium price but a greater average total cost
e. It experiences the same equilibrium price but a lower average total cost
QUESTION 4Which of the following is true of perfect price discrimination?
a. Profit is lower than it would be without discrimination.
b. Revenue is higher than it would be without discrimination, but profit is lower.
c. Average revenue and average cost are both higher than they would be without discrimination, so it is not certain whether profit will be higher.
d. Consumer surplus is zero.
e. Profit is zero.
QUESTION 5There are five firms in the cresset industry. The market shares of the five firms are 60 percent, 15 percent, 15 percent, 6 percent, and 4 percent. The Herfindahl index is
a. 96
b. 4,086
c. 10,000
d. 4,102
e. 4,100
QUESTION 6Suppose a perfectly competitive increasing-cost industry is in long-run equilibrium when market demand suddenly decreases. What happens to the industry in the long run?
a. It experiences no change from the original equilibrium
b. It experiences a higher equilibrium price and produces less output
c. It experiences a lower equilibrium price and produces less output
d. It experiences the same equilibrium price but produces more output
e. It experiences the same equilibrium price but produces less output
QUESTION 7A monopolist that engages in perfect price discrimination
a. divides all buyers into two mutually exclusive groups
b. refuses to sell to consumers of certain races, sexes, or creeds
c. charges the same price for every unit sold
d. charges a different price for every unit sold
e. charges buyers who want a little of the good a low price and charges buyers who want a lot of the good a high price
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