Which of the following is true about price discrimination?
a. When there are a number of competing firms, price discrimination is less likely because competitors tend to undercut the high prices charged those discriminated against.
b. A profit-maximizing seller will charge a higher price for those with a greater willingness to pay, and a lower price for demanders with a lower willingness to pay.
c. Price differentials between groups will erode if reselling is easy.
d. All of the above are true of price discrimination.
Question 2
Suppose the price of an ounce of silver is 100 nuevos soles in Peru and 400 in the United States. This implies:
a. the Peruvian nuevo sol is worth four times the value of a U.S. dollar.
b. the Peruvian nuevo sol is worth one-fourth the value of a U.S. dollar.
c. Peru's economy must be four times larger than the U.S. economy.
d. the U.S. economy must be four times larger than that of Peru.
e. the U.S. dollar is worth four times the value of a Peruvian nuevo sol.
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