1. If you can choose from each of the following pricing strategies in a particul
ID: 1124242 • Letter: 1
Question
1. If you can choose from each of the following pricing strategies in a particular market, which should you choose?
a) 2nd degree price discrimination
b) 3rd degree price discrimination
c) 1st degree price discrimination
d) monopoly pricing
2. Suppose I have a general idea about the own-price elasticity in my market, and I'm using this along with my marginal cost to set my price. What among the following choices is most likely to improve my profits?
a) Lowering price
b) Producing more units
c) Raising price
d) Issuing coupons for large purchases
Explanation / Answer
1> c) 1st degree price discrimination
Reason
Since 1st degree price discrimination, as a seller I can earn the maximum amount of profit, thus it should be the best one as a producer.
2> d) Issuing coupons for large purchases
Reason
Other options are eliminated on the basis that no information is given for the price and the amount of output.
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