Question

QUESTION 1

1. Which of the following conditions is NOT required for successful direct price discrimination?

   	A.	The seller must be able to prevent arbitrage between low-value and high-value buyers
   	B.	The seller should charge higher prices to high-value buyers
   	C.	The seller must offer different products for high-value and low-value groups of consumers
   	D.	The seller must be able to identify customers as high-value or low-value buyers

QUESTION 2

1. Under a version of direct price discrimination, the seller is able to charge each customer their maximum willingness to pay for the product. This practice is known as perfect price discrimination. If a seller successfully adopts perfect price discrimination, what happens to the consumer surplus in this market?

   	A.	Consumer surplus increases
   	B.	Consumer surplus becomes negative
   	C.	Consumer surplus becomes zero
   	D.	Consumer surplus declines but remains to be positive

QUESTION 3

1. Which of the following statements is NOT true?

   	A.	The Robinson-Patman Act was passed by Congress in 1936
   	B.	The Robinson-Patman Act allows sellers to charge different prices to different customers if the costs of serving these buyers are different
   	C.	The Robinson-Patman Act allows sellers to offer discounts in order to meet the prices offered by other sellers
   	D.	The Robinson-Patman Act was passed by Congress in response to the pricing behavior of Walmart

QUESTION 4

1. Under successful direct price discrimination, the seller should charge higher prices to buyers with more inelastic demand

   True

   False

Answer 1

Question 1)

Answer: ( C)

Product must be same but it should be sold out at different price to different customers.

There should not be any chance of transfer of product from low priced market to high priced market.

Questions 2)

Answer: ( C)

Under the perfect degree price discrimination, consumer surplus is zero. Consumer surplus becomes the producer surplus.

Question 3)

Answer: ( D)

Walmart was founded in 1962 while Robinson Patman Act was passed in 1936.

Question 4)

Answer: True.

High price can be charged from customers with inelastic demand. While high price can not be charged from customers with elastic demand.