8. If DeBeers has a monopoly in the diamond market, then DeBeers must be engagin

Question

8. If DeBeers has a monopoly in the diamond market, then DeBeers must be engaging in perfect price discrimination if it is charging every customer the same price for a diamond. the marginal revenue of selling one more diamond is greater than the price of that diamond if DeBeers cannot price discriminate. the marginal revenue of selling one more diamond is less than the price of that diamond if DeBeers cannot price discriminate. the market demand for diamonds is perfectly elastic. a. b. c. d. The Sudsy Soap company places coupons, giving consumers 50 cents off the price of a lowering the price for all consumers because: . the local newspaper. This strategy makes more sense than simply a. the company only wants to sell soap to consumers who are willing to clip b. those consumers who are unwilling to clip coupons are not i1 coupons. consumers with a more elastic demand will use the coupon to get a lower price, but consumers with inelastic demand are willing to pay full price. consumers with a more inelastic demand will use the coupon to get a lower price, but consumers with elastic demand are willing to pay full price. c. d. A monopolist that earns positive economic profit in the short run will: a. always continue to earn positive economic profit in the long run. b. earn positive economic profit in the long run if it can maintain barriers to entry 0. assuming no changes in costs or market demand. earn higher economic profit in the long run because of economies of scale. earn zero economic profit in long-run equilibrium. c. d.

Explanation / Answer

Ans:

8) Option C

The marginal revenue of selling one more diamond is less than the price of that diamond if Debeer can not price discriminate.

If Debeers wants to sell one additional Diamond it needs to lower the price, Hence the marginal revenue of selling one additional diamond is less than the price.

9) Option C

Consumers with a more elastic demand will use the coupon to get a lower price, but consumers with inelastic demand are willing to pay full price.

10) Option B

earn positive economic profits in the long run if it can maintain barriers to entry, assuming no changes in costs or market demand.

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