Question

5. Many physicians in rural areas possess market power. Is price discrimination evidence of control over price?

6. Which of the following is not required for successful price discrimination: a. Asymmetric information. b. Market segmentation c. Competition d. Product or service resale.

7. Physicians are imperfect agents for their patients because patients lack the knowledge to evaluate physician advice. This imperfection is exacerbated by the physician’s dual role as practitioner and diagnostician. a. True b. False

Answer 1

a) Yes, price discrimination in rural areas are an example of price control, if there is no price control i.e. the demad is elastic and there are many sellers of the services then the physician will not be able to price discriminate.

b) "C"

Competition is not required for price discrimination. higher the competition the difficult it will be to do price discrimination.

c) True, if the diagnosiantician and practicioner were different people then physicial control over the market will be less.