B if the price elasticity of demand for the product

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b. If the price elasticity of demand for the product is the same in each market, then it would be useless for the firm to charge different prices in the different markets, even if the markets can be separated (i.e., even if they can be segmented). The reason is that the firm's profit-maximizing rule for third-degree price discrimination that MR 1 = MR 2 = ...= MRn = MC would involve charging the same price in each market. 3. In a system of private education, there is likely to be underinvestment in education because the social benefits of education exceed the private benefits. The reason for this is that, in general, a more educated individual makes for a more responsible individual (an external benefit). Since an individual decides how much to invest in education based only on the return that he or she, as an individual, receives from education, he or she is likely to spend less on education than is socially optimal. This provides the rationale for public support of private education and for a public educational system. 4. An exporter faces a foreign-exchange risk because he or she usually receives payment for the exports three months after shipping them, and in the meantime the
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foreign currency can depreciate (which means that the exporter will receive less in terms of the domestic currency than he or she anticipated). The exporter can hedge the foreign-exchange risk with a forward contract (in this case, a sale of the amount of the foreign currency due to coincide with the date of the foreign currency receipt). 5. Answer varies
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