Q9 of 25 Page 1

Discuss briefly the meaning of ‘‘Price discrimination’’ and ‘‘Product differentiation’’ with the help of suitable examples.

OR


Is a firm under perfect competition a price taker, or a price maker?Justify your answer.


Price discrimination is different prices that are charged by the monopolist for the same product. Example; there are differences in price that is charged by a doctor from rich and poor.

Product differentiation is used by the companies in marketing campaigns to distinguish their product from other similar products in the market. This strategy focuses on real product differences .example:


The difference in the product based on brand, wrapper, etc.


OR


they are price takers. There are numerous firms in the market for the same commodity, a consumer has many options while purchasing.


In a competitive market, there are many firms so the contribution of a single is minimal. A single firm cannot influence the entire market just by itself, so the firms have no other choice than to be risk-takers.


More from this chapter

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7

With the help of the given schedule, determine the firm’s equilibriumusing marginal revenue -marginal cost approach. Give valid reasons in support of your answer.

 8

The price of commodity increases from <10 to <14. Calculatepercentage fall in quantity demanded of the commodity if the coefficient of price elasticity of demand is (–) 1 �25.

OR


State whether the following statements are true or false. Give valid reasons in support of your answer.


(a) The coefficient of price elasticity of demand for the commodity is inversely related to the number of alternative uses of the commodity.


(b) Luxury goods often have a lower price elasticity of demand.


 10

Suppose a consumer whose budget is <500, wants to consume only two goods, Good X and Good Y. The goods are respectively priced at <50 and <25.

Answer the following questions based on the given information :


(a) State the budget equation of the consumer.


(b) What is the slope of the budget line?


(c) How many units can she purchase if she spends the entire <500 on Good X?


(d) How many units can she purchase if she spends the entire <500on Good Y, given that the price of good Y has doubled?


OR


‘‘For a consumer to be in equilibrium position, marginal rate of substitution between the two goods must be equal to the ratio of prices of


the two goods.'' Do you agree with the given statement? Justify your answer.


 11

(a) Identify the market form and explain the corresponding feature, as given in the following statement: ‘The commodity in this market has attributes which are identical for sellers and buyers.’’

(b) Define Price Floor. State the likely consequence of this type of intervention by the government.