third_degree

third_degree - Problems on Third degree price...

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Problems on Third degree price discrimination 1. An event in a stadium was sold out. While 60% of the participants paid full price, the other 40% paid only half price. Some people that were willing to pay more than half price were left out. Conclusion : the organizers could have made more money. True or False. Explain. of selling in the second market. Therefore, the price in the second market must be higher. True or False. Explain. 3. A monopolist sells to several markets and is able to do third degree price discrimination. It will choose quantities so that elasticities are equated across these markets. True or False? Explain. 4. Demand elasticity in market A is half the demand elasticity in market B and the price a monopolist is charging twice as high. Show that the price in market B is 50% higher than marginal cost. 5. There are two groups of consumers. A monopolist is using third degree price discrimination (group pricing). Marginal cost c = 1 is the same in both markets. One of the markets have twice the demand elasticity of the other market. The price in the market with low elasticity p = 2 : What can you infer about the ratio of the prices? Explain your answer. (a) Price is be twice as high in the market with lower elasticity. (b) Price is more than twice as high in the market with lower elasticity.
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This note was uploaded on 10/15/2008 for the course ECON 171 taught by Professor Hopenhayn during the Spring '07 term at UCLA.

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third_degree - Problems on Third degree price...

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