Exam 16: Pricing Strategy

Table 16-3 Julie plans to start a pet-sitting service. She surveyed her neighborhood to determine the demand for this service. Assume that each person surveyed demands only one hour of pet sitting services per period. Table 16-3 above shows a portion of her survey results. -Refer to Table 16-3. Suppose Julie's marginal cost of providing this service is constant at $7 and she charges $7. How many hours will be purchased and what is her total revenue?

Joss is a marketing consultant. Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report. Iris is willing to pay $500 for the service while Daphne is willing to pay $800. Suppose that the opportunity cost of Joss's time is $1,200. Assume that Iris and Daphne do not know each other. If the price of the report is $500 per copy

If Mort's House of Flowers sells one dozen roses to different customers at different prices, economists would consider this an example of

Suppose that a price-discriminating producer divides its market into two segments. If the firm sells its product at a price of $34 in the market segment with relatively less-elastic customer demand, the price in the market segment with more-elastic customer demand will be

When a monopolist engages in perfect price discrimination, the quantity produced and sold

The price of admission to Walt Disney World

If price discrimination occurs in a market

For many products, such as fast foods, a variety of prices can be found, but sellers with higher prices can expect to sell their products because

Figure 16-2 Plato Playhouse, a theatre company in the university town of Wegg, caters to two groups of customers: students and the non-student population. Figure 16-2 shows the demand curves for the two groups of customers. -Refer to Figure 16-2. Suppose Plato Playhouse price discriminates. What is the quantity sold to each group of customers and what is the total quantity sold?

A perfectly competitive firm cannot practice price discrimination because

Which of the following will prevent firms from engaging in price discrimination?

A firm that can effectively price discriminate will charge a higher price to

Firms engage in odd pricing when they charge prices that appear to be less than they really are; for example, charging a price of $4.95 instead of $5.00 and $.99 instead of $1.00. How have researchers tried to determine whether odd pricing is successful in convincing consumers that odd prices are less than they really are?

Erin and Deidre, two residents of Ithaca, New York, are planning a trip to Boston. Erin, the sales manager for a large retailer, has to attend a business meeting. Deidre, a college student on vacation, is planning a leisurely trip to visit friends and relatives. Which of the following statements is true?

Many firms use technology to gather information on the preferences of consumers and their responses to changes in prices. This information is then used to adjust prices of the firms' goods and services. This practice is called

Clarissa Kessler operates a store that sells toys. Her business suffered tremendously when a giant discount store chain opened a store in the area and is able to sell its products for less than Clarissa's wholesale cost. Is this evidence of illegal price discrimination on the part of the discount store chain?

One reason why McDonald's charges a single price for its products is that it is difficult and costly for the company to determine each individual consumer's willingness to pay.

The collection and analysis of massive amounts of data, with the goal of measuring aspects of people's behavior is referred to as

Figure 16-5 -Refer to Figure 16-5. Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price. (This is also called an optimal two-part tariff.) What is the quantity it should produce?

Suppose the per-unit production cost of a book is $4.00 and the retail price is $32. If the book publisher sells books to a bookstore at a 40 percent discount, what is the amount of the publisher's markup per book? Assume that bookstores sell books at the retail price.