Check Your Understanding

1. Question

   True or false? Explain your answer.

   1. A single-price monopolist sells to some customers that would not find the product affordable if purchasing from a price-discriminating monopolist.

   2. A price-discriminating monopolist creates more inefficiency than a single-price monopolist because it captures more of the consumer surplus.

   3. Under price discrimination, a customer with highly elastic demand will pay a lower price than a customer with inelastic demand.

2. Question

   Which of the following are cases of price discrimination and which are not? In the cases of price discrimination, identify the consumers with high price elasticity of demand and those with low price elasticity of demand.

   1. Damaged merchandise is marked down.

   2. Restaurants have senior citizen discounts.

   3. Food manufacturers place discount coupons for their merchandise in newspapers.

   4. Airline tickets cost more during the summer peak flying season.