In order for price discrimination to exist A) markets must be ...

[clippers!]

In order for price discrimination to exist
 
  A) markets must be capable of being separated.
  B) markets must be interdependent.
  C) different demand price elasticities must exist in different markets.
  D) demand price elasticities must be identical in all markets.
  E) Both A and C

Question 2

You are having a party and one of your guests lights up a cigar without asking. Explain why this creates an externality.
 
  What will be an ideal response?

[nixon_s]

Answer to Question 1

E

Answer to Question 2

Smoking in an enclosed room forces other guests to inhale smoke which they would not have chosen to inhale if the decision were completely up to them. This external burden can range from headaches, being uncomfortable, and lung cancer. Of course, you could limit the externality by kicking the guest out.