Question
Suppose two types of consumers are interested in buying subscriptions to The Economist :ProfessionalsandStudents. If The Economist doesn't price-discriminate, it sets a profit-maximizing uniform price,
Suppose two types of consumers are interested in buying subscriptions toThe Economist:ProfessionalsandStudents. IfThe Economistdoesn't price-discriminate, it sets a profit-maximizing uniform price, which turns out to be so high that only Professionals subscribe.
The Economisthas asked you to determine whether demographic price discrimination might increase profits. You determine that under the proft-maximizing price-discrimination scheme, Students should receive a discounted subscription.
Now, consider the following sentence, which is missing three phrases:
Relative to the situation under the profit-maximizing uniform-pricing scheme, under the profit-maximizing price-discrimination scheme, the price paid by Professionals will ______, the profits made byThe Economistwill ______, and total consumer surplus will_____.
Which of the following sequences of phrases (placing the first phrase in the first blank, etc.) would make the sentence correct?
a)rise; rise; fall
b) stay the same; rise; fall
c) stay the same; rise; rise
d) rise; stay the same; fall
e) fall; stay the same; rise
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started