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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 ratherthan a price taker?85)Answer: A price taker has no market power and therefore cannot influence market price. Aprice maker, on the other hand, is able to influence market price. As long as a sellercannot influence market price, it will not be able to engage in price discrimination.Diff: 2Page Ref: 523/523Topic: Price DiscriminationLearning Outcome: Micro 14: Discuss production and pricing decisions within monopolies and howpublic policies affect monopoliesAACSB: Analytic Skills86) What three conditions must hold for a firm to successfully price discriminate?86)1.A firm must possess market power.2.Some consumers must have a greater willingness to pay for the product thanothers; 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 lowprice cannot resell at a higher price.Diff: 2Page Ref: 523/523Topic: Price DiscriminationLearning Outcome: Micro 14: Discuss production and pricing decisions within monopolies and howpublic policies affect monopoliesAACSB: Reflective Thinking26
ESSAY. Write your answer in the space provided or on a separate sheet of paper.