Question

31. (SHORT TIME) TRUE/FALSE--A firm that employees 1st degree and block pricing strategies captures ALL consumer...

31. (SHORT TIME) TRUE/FALSE--A firm that employees 1st degree and block pricing strategies captures ALL consumer surplus, which leads to higher profits.

32. (SHORT TIME) TRUE/FALSE--A firm will enjoy higher profits when it utilizes 1st degree price discrimination rather than two-part pricing.

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Homework Answers

Answer #1

31) true. under first degree price discrimination each and every reservation price is charged which means the entire consumer surplus is extracted as profits. In block pricing the entire consumer surplus is charged as price for one block.. therefore both result in higher profits by capturing consumer surplus

32) false. two part pricing and first degree price discrimination both help in extracting the entire consumer surplus. Under similar demand condition both will generate same profit

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