“Suppose that Cornell University faces a downward-sloping linear demand curve for the undergraduate education that it provides. If Cornell is able to engage in perfect, first-degree price discrimination (through obtaining detailed financial information from each prospective student and offering different levels of financial aid), then Cornell’s marginal and average revenue curves will be identical.” Explain why this statement is true, false or uncertain.
Answer to relevant QuestionsIn the preceding problem, suppose that the club can employ a two- part pricing scheme but must charge all members the same annual membership (entry) fee. What entry fee and per- round price should the club charge? Explain how the residual demand curve confronting the dominant firm in the dominant firm model is derived. In this derivation, what is assumed regarding how the output of other firms is determined? How does it differ from ...Suppose that the market for Web search engines can best be characterized as monopolistically competitive. If this is the case, should firms that operate in the market such as Yahoo and Google be prosecuted by antitrust ...In a two-firm Stackelberg model of oligopoly, can both firms be “leaders”? Explain why or why not.Why don’t consumers become fully informed about the prices different firms charge? If consumers are not fully informed, why is a firm likely to possess some degree of market power?
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