What total profit does a firm achieve by implementing price discrimination ?
Show answer Hide answer
Answer: D. $660,000
Explanation
Perfect price discrimination allows a profit-maximizing monopolist to capture the entire available consumer surplus completely. By charging every individual consumer their maximum willingness to pay, total economic profit reaches the maximum possible level. The calculated total profit figure of six hundred sixty thousand dollars accurately represents the complete market surplus extraction. Price discrimination occurs when a firm sells the exact same product to different consumers at varying prices. First-degree price discrimination requires the monopolist to possess complete information regarding individual consumer demand curves and preferences. Monopoly market structures lack direct competitors, granting firms significant market power to set prices and manage output levels.
Alternative profit figures such as one hundred sixty thousand dollars underestimate the full surplus extracted through discrimination. Options representing lower profit totals fail to account for complete consumer surplus capture under ideal theoretical conditions. Incorrect numerical choices emerge from incomplete calculations that omit portions of the available market demand rectangle.
Related questions
Q1. Canada, France, Germany, Italy, Japan, the UK, and the USA constitute ?
Show answer Hide answer
Answer: A. G-7 countries
Group of Seven comprises major advanced industrial economies globally. Canada, France, Germany, Italy, Japan, UK, USA form this coalition. These nations coordinate macroeconomic policies at annual international summits....
Q2. Which crop is most compatible with black volcanic soil and a tropical climate lacking excessive rainfall ?
Show answer Hide answer
Answer: C. Cotton
Cotton thrives exceptionally well in tropical climates with black volcanic soils that retain adequate moisture. The unique mineral composition of volcanic regur soil provides ideal growing conditions for fiber crops. Suf...
Q3. Catalog marketing is a major industry in the U.S., with the typical household receiving __________ catalogs annually?
Show answer Hide answer
Answer: B. 50
The correct answer indicates that fifty promotional catalogs represent the standard annual household volume. Extensive marketing industry data demonstrates that average residential addresses receive roughly fifty mailed...
Q4. How do Carmen Reinhart and Kenneth Rogoff account for capital flowing from poor to rich nations ?
Show answer Hide answer
Answer: B. the price role of political and credit-market risk in many LDCs
Reinhart and Rogoff explain capital flows by emphasizing political instability and credit-market risks within developing nations. Capital tends to avoid developing economies when political uncertainty and unreliable lega...
Q5. What category of food are champignons ?
Show answer Hide answer
Answer: C. Mushrooms
Champignons are a widely cultivated variety of edible mushrooms. Botanical and culinary classifications identify champignons as standard edible fungi used in cooking. Commercial mushroom farming produces vast quantities...
Q6. By employing fiscal policy—specifically altering ______ and/or _____—governments pursue economic growth and price stability goals?
Show answer Hide answer
Answer: D. tax rates, government spending
Governments utilize fiscal policy by actively adjusting tax rates and government spending levels to influence the economy. Changing taxation and public expenditure directly impacts aggregate demand to achieve macroeconom...