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Author Question: What conditions should be met to practice price discrimination in a ... (Read 30 times)

nenivikky

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on: Jun 30, 2018
What conditions should be met to practice price discrimination in a market?

Question 2

The Bretton Woods system required countries to actively buy and sell dollars to maintain fixed exchange rates when:
 a. a country experienced a severe bout of inflation.
  b. the free market equilibrium exchange rate differed from the fixed rate.
  c. a country experienced serious unemployment.
  d. the threat of recession began to spread from one country to another.
  e. worldwide trade began to deteriorate.


jaymee143

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Reply #1 on: Jun 30, 2018
Answer to Question 1

To practice price discrimination, the following three conditions must hold:
1 . Monopoly Power. Price discrimination is possible only with monopoly or where members of a small group of firms follow identical pricing policies.
2 . Market Segregation. Price discrimination can only occur if the demand curves for markets, groups, or individuals are different.
3 . No Resale. For price discrimination to work, the person buying the product at a discount must have difficulty in reselling the product to customers being charged more.

Answer to Question 2

b


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