False. In a second degree price discrimination, seller charges different prices for different quantities of a product and price varies according to quantity demanded and the second degree price discrimination needs less information about consumers preferences.Examples: quantity discounts, when more units are sold at a lower per-unit price; and block-pricing etc. Whereas in a first degree price discrimination, to obtain the highest revenue, the seller must know the absolute maximum price that every consumer is willing to pay. Hence,the first degree price discrimination requires the firm to know more information on all of its customers.To achieve the successful first degree price discrimination, a firm should have full information on every consumer's individual preferences and willingness to pay. Therefore, successful first degree price discrimination requires the firm to know more information about consumers than successful second degree price discrimination.
In general successful second degree price discrimination requires the firm to know more information about consumers than...
Please answer clearly and explain. Thank you! Question 2 (35 points): (3rd Degree Price Discrimination) Let there be a monopolist firm and two groups of consumers. Suppose that marginal cost is defined by MC- 2. The demand that each consumer receives is given by 1 50- P 2Q2- 200 - P2 i) (4 points) Consider the monopolist engages in first degree price discrimina- tion only in market 2. Compute the monopoly profit in this market. ii) (4 points) Which group...
1. Give an example of a good or service that is commonly sold using second-degree price discrimination, and one that is commonly sold using third-degree price discrimination, besides the ones mentioned in the lecture and textbook. Be sure to provide enough information about how these goods are sold to make it clear that they are valid examples. 2. Using at least one graph, explain how it is possible that firms in a monopolistically competitive industry can have monopoly power, yet...
Describe the different price strategies. Discuss when a firm would employ first, second, or third-degree price discrimination. Provide an example of a first degree, second degree, third degree, and an advanced pricing strategy. Also talk about the pros and cons to different pricing strategies (for example complex, hard to implement, amount of producer surplus generated). PLEASE BE DETAILED AND PROVIDE CLEAR EXAMPLES. THANK YOU!
Suppose that a price-searcher firm had consumers who were all identical to each other. The individual consumer's demand function is given by: p= 20 -5P. The firm decides to try a second-degree price discrimination scheme. The first 9 units will have a price of $2.20. After that, any units a consumer purchases will be only $1.40. The firm has a constant marginal cost of $0.20 per unit. Calculate the consumer surplus. (Do not include a "S" sign in your response....
Question 11 Suppose that a price-searcher firm had consumers who were all identical to each other. The individual consumer's demand function is given by: qp- 40 -3P. The firm decides to try a second-degree price discrimination scheme. The first 18 units will have a price of $7.33. After that, any units a consumer purchases will be only $2.33. The firm has a constant marginal cost of $1.33 per unit. Calculate the consumer surplus. Tries remaining:2 Points out of 8.33 Flag...
THIRD-DEGREE PRICE DISCRIMINATION A seller faces two groups of buyers: Pi-16- Q1 and P2-24-Q2. Marginal cost is constant at $4 and fixed costs are zero a. Assuming that resale of the good by consumers is impossible, find profit-maximizing quantities and prices under 3rd-degree price discrimination. No need to calculate profit. Show graphs and math. Suppose someone argues "Under this outcome Pi and P2 differ, so this cannot be profit maximizing since a seller could always transfer a unit from the...
Asymmetric information results when managers of a firm have more information about the firm's operations and future prospects than investors have. True False
Consider the following examples and categorize each as either first-degree, second-degree, or third-degree price discrimination. a) The publishers of the Economist magazine charge a lower subscription price to students than non-students. In addition, the average price per issue is lower for a 2-year subscription than an annual subscription. b) In many countries, governments issue bonds via bond auctions. In some countries, such as Germany and Cambodia, investors pay for the bonds based on the prices they bid at the auctions....
Price Discrimination and Hurdles 3 3 unread replies. 3 3 replies. Negative connotations are likely when you combine “discrimination” with most words (e.g., “racial discrimination”). But, is price discrimination bad? The hurdle method of price discrimination is one method price-discriminating firms use to separate those who are willing to pay a high price from those who are more price conscious. The hurdle method is the practice by which a seller offers a discount to all buyers who overcome some obstacle....
15. Which of the following is a true statement about the difference between a price-taker firm and a competitive price-searcher firm in the long run (more than one answer is correct)? a. Both will sell their products at a price equal to average total cost, but only the price-searcher will produce at minimum average total cost. b. Both will sell their products at a price equal to marginal cost, and only the competitive price searcher will produce at minimum average...