Price discrimination allows a firm to charge different price

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1. The law of diminishing returns says that at some point, as the firm's output increases, marginal product begins to fall and can eventually became negative. Why does this happen? ( in your own words)??

2. In purely competitive market, market demand is down sloping (quaintly sold increases as price decreases). However, from the point of view of the individual purely competitive firm, the demand for the firm's product is perfectly elastic, at the market price. ( In your own words) Why is this?

3. For the purely competitive marginal revenue appears to be the same as market price (MR=P). But for the other industry types (monopolistic competition, pure monopoly, oligopoly) MR is not viewed as the same as the demand curve (D) ; Mr is viewed as lower than D. (In your own words!) Why?

4. Price discrimination allows a firm to charge different price to different customers. Explain why a firm would find price discrimination to be attractive. (In your own words)?

Reference no: EM13834280

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