Question 7 In a competitive market without any price ceilings or floors O dead w

Question

Question 7 In a competitive market without any price ceilings or floors O dead weight loss is shifted to the consumers O dead weight loss is equal to the frms proft. O dead weight loss is zero. O dead weight loss is shifted to the producers. Question 8 cra he otodowe Na O Charge different prices in two different countries O Charge different prices for two different releases of the same book, the first vs. the second Charge different prices for textbooks vs. fiction books O Charge different prices for the hardcover book and the paperback book

Explanation / Answer

7. The correct option is

The reason is that, in a perfect competition, which is in a state of laissez faire (there is no governement intervention of taxation, price ceiling or floor), the deadweight loss is zero. If there is such an intervention, or if the market is imperfect (especially monopoly), the deadweight loss arises then only.

8. The correct option is

Price discrimination is charging different prices to different consumers for the same product. The first option is indeed a classic example of price discrimination. Second and founrth one is also a price discrimination, as the releases are essentially the same product. The third option consist of different product, and hence, different market (which are not in terms of different market in price discriminaiton).

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