Quiz_165 - SHORTANSWER. 85 thanapricetaker 85 Answer

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SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question. 85) Why is it necessary for a firm that practices price discrimination be a price maker rather than a price taker? 85) Answer: A price taker has no market power and therefore cannot influence market price. A price maker, on the other hand, is able to influence market price. As long as a seller cannot influence market price, it will not be able to engage in price discrimination. Diff: 2 Page Ref: 523/523 Topic: Price Discrimination Learning Outcome: Micro 14: Discuss production and pricing decisions within monopolies and how public policies affect monopolies AACSB: Analytic Skills 86) What three conditions must hold for a firm to successfully price discriminate? 86) Answer: Successful price discrimination has three requirements: 1. A firm must possess market power. 2. Some consumers must have a greater willingness to pay for the product than others; the firm must know the prices consumers are willing to pay. 3. The firm must be able to segment the market so consumers who buy at a low price cannot resell at a higher price. Diff: 2 Page Ref: 523/523 Topic: Price Discrimination Learning Outcome: Micro 14: Discuss production and pricing decisions within monopolies and how public policies affect monopolies AACSB: Reflective Thinking 26
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ESSAY. Write your answer in the space provided or on a separate sheet of paper.
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