Share
Explore BrainMass

Revenue maximization price and price discrimination

Revenue maximization occurs when a firm sells at a price:

Select one:
a. that is equal to its minimum average variable cost
b. where its marginal revenue is equal to its marginal cost
c. where its marginal revenue is zero
d. None of the above

Which of the following is true for price discrimination:

Select one:
a. Regards normative assessment of the pricing practice
b. Means the price to marginal cost ratio differs between or among similar products
c. Is primarily concerned with ascertaining the social welfare effects of charging different prices to different customers
d. None of the above are true in regard to price discrimination

When a firm engages in cost-plus pricing:

Select one:
a. It is ignoring principles of profit maximization as fixed cost is included in the determination of the selling price
b. The resulting level of output the firm produces may be consistent with a marginal pricing approach if the long-run average cost curve exhibits constant returns to scale over the relevant range of output
c. The firm may appear to be engaging in a marginal pricing practice even if the markup is not a reflection of a normal profit
d. All of the above are correct

Solution Preview

Revenue maximization occurs when a firm sells at a price:
Answer: c. where its marginal revenue is zero

Which of the following is true ...

Solution Summary

Revenue maximization price and price discrimination are given. Marginal revenues maximization are given.

$2.19