Economics - monopolies and etc.?

Question

Which of the following markets best illustrates the practice of price discrimination?

a.The airline market.

b.Wheat farming.

c.The fast-food market.

d.The personal computer market.

If the entire output of a market is produced by a single seller, the firm:

a.Is a monopoly.

b.Faces a perfectly inelastic demand.

c.Can charge any price it wants and not lose customers.

d.All of the above.

Price discrimination:

a.Increases profits.

b.Is the sale of an identical good at different prices to different consumers by a single seller.

c.Requires the firm to eliminate possible resale of its product.

d.All of above.

A market may be contestable if there are:

a.Falling average fixed costs in the long run.

b.Government regulations.

c.High barriers to entry.

d.Possibilities for entry.

Answer 1

1 - a

2 - a

3 - d

4 - d

Answer 2

1. airline market.  they charge you more if you have a short stay (mostly businessmen) than if you have a longer stay (most likely vacationers)

2. is a monopoly, b is not always true, and c is not true, because the demand curve is not completely inelastic

3. d. a, because it segments the market based on willingness to pay, b is the definition of it, and c is necessary, otherwise the people who can buy it cheaply will resell it, and the firm will earn no extra profit

4. d, otherwise the firm would act like a monopoly