Price Discrimination & Profitability Intermediate Microeconomics Questions
Price Discrimination & Profitability Intermediate Microeconomics Questions
1. Does price discrimination lead to greater social benefits (both producers and consumers) or does it simply enhance producer profitability. Explain fully. Explain if your answer would change if the price discrimination involved cross subsidies of variable costs rather than an allocation of fixed cost based on inverse elasticity
?2?Show that a non-cooperative oligopoly, recognizing its mutual interdependence and monitoring each rival’s actions,converges to a perfectly competitive market are the number of firm increase.What assumptions are necessary for this convergence?
?5?Compare the price and output decisions of profit-maximizing firm under conditions of pure competition,imperfect competition and small oligopoly. Show that your answer does not depend upon the cost structure of the firm.What are the social implications?
