Answer to Question #49386 in Microeconomics for Kristin

Question

A perfectly competitive firm is not able to successfully price discriminate because:

A. it breaks even in the long run and therefore can not afford to engage in yield management
B. it does not advertise and this prevents it from marketing its product to different segments of the market
C. consumers in perfectly competitive markets have the same maximum willingness to pay for units of the good
D. the firm will not be able to sell units to any group of consumers that are confronted with prices above the market price


The notion that a firm should produce that level of output such that MR = MC to maximize profit or minimize operating losses applies:

A.in both competitive and monopolistic industries
B. only to monopolies
C. only if the firm is a "price taker"
D.only to firms that can price discriminate

Answer 1

1. A perfectly competitive firm is not able to successfully price discriminate because:

D. the firm will not be able to sell units to any group of consumers that are confronted with prices above the market price

2. The notion that a firm should produce that level of output such that MR = MC to maximize profit or minimize operating losses applies:

A.in both competitive and monopolistic industries