"economics"exercise:Topics in Demand and Supply Analysis

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Questions 1:

An electricity producer charges lower rates to its high-volume customers and higher rates to its low volume customers. The degree of price discrimination is best described as:

A 、second.

B、 first.

C、 third.

Questions 2:

A college student’s monthly demand for pizza is given by the equation:

economics exercise:Topics in Demand and Supply Analysis

The student’s current monthly food budget is $540, the price of a pizza is $6, and the price of a bottle of cola is $2. If the student’s monthly food budget were to increase to $740, the slope of her demand curve for pizza would be closest to:

A、 –2.0.

B、 –2.3.

C、 –0.5.

View answer resolution

【Answer to question 1】A

【analysis】

A is correct. Second-degree price discrimination involves using the quantity purchased as the basis for the pricing of a particular good. B is incorrect. First-degree price discrimination (perfect price discrimination) involves charging each customer their reservation price. C is incorrect. Third-degree price discrimination involves segregating customers by demographic or other traits.

【Answer to question 2】A

【analysis】