Question 1

Price discrimination

Accepted Answer

A) is illegal in the U.S. 
B) is a form of pricing where consumers pay different prices for a good. 
C) allows firms to set a single intermediate price between consumers' low and high willingness to pay. 
D) is when consumers use prices to discriminate between different quality products. 
A) is illegal in the U.S. 
B) is a form of pricing where consumers pay different prices for a good. 
C) allows firms to set a single intermediate price between consumers' low and high willingness to pay. 
D) is when consumers use prices to discriminate between different quality products.

Question 2

When a firm has a monopoly in a market and also perfectly price discriminates, total welfare

Accepted Answer

A) is maximized. 
B) is lower than in a perfectly competitive market. 
C) is higher than in a perfectly competitive market. 
D) is minimized. 
A) is maximized. 
B) is lower than in a perfectly competitive market. 
C) is higher than in a perfectly competitive market. 
D) is minimized.

Question 3

Which of the following sellers is most able to perfectly price discriminate?

Accepted Answer

A) a college or university 
B) the post office 
C) a clothing store 
D) a grocery supermarket 
A) a college or university 
B) the post office 
C) a clothing store 
D) a grocery supermarket

Question 4

If a monopoly charges higher prices to consumers who buy smaller quantities than to consumers who buy larger quantities, then

Accepted Answer

A) consumer surplus is larger than under single-price monopoly. 
B) social welfare is larger than under perfect competition. 
C) the monopoly's profits are larger than under single-price monopoly. 
D) the monopoly's profits are larger than under perfect price discrimination. 
A) consumer surplus is larger than under single-price monopoly. 
B) social welfare is larger than under perfect competition. 
C) the monopoly's profits are larger than under single-price monopoly. 
D) the monopoly's profits are larger than under perfect price discrimination.

Question 5

Price discrimination

Accepted Answer

A) is a type of nonuniform pricing. 
B) is a way to legally charge a higher price to people you don't like. 
C) forces producers to make a tradeoff between charging low prices or high prices. 
D) works because consumers are ignorant about the practice. 
A) is a type of nonuniform pricing. 
B) is a way to legally charge a higher price to people you don't like. 
C) forces producers to make a tradeoff between charging low prices or high prices. 
D) works because consumers are ignorant about the practice.

Question 6

Peak-load pricing

Accepted Answer

A) charges more for a good during periods of high demand. 
B) charges more for a hotel room the higher up the mountain it is. 
C) charges less for a good during periods of high demand, because of regulatory reasons. 
D) is generally used during January and February. 
A) charges more for a good during periods of high demand. 
B) charges more for a hotel room the higher up the mountain it is. 
C) charges less for a good during periods of high demand, because of regulatory reasons. 
D) is generally used during January and February.

Question 7

Customers are usually more willing to pay more for the first unit of a good they purchase than for the second, third, or subsequent units. This implies that

Accepted Answer

A) typical consumers are irrational. 
B) firms are using non-linear price discrimination. 
C) firms are unable to determine their customers' reservation prices. 
D) typical consumers have a downward-sloping demand curve. 
A) typical consumers are irrational. 
B) firms are using non-linear price discrimination. 
C) firms are unable to determine their customers' reservation prices. 
D) typical consumers have a downward-sloping demand curve.

Question 8

Suppose a profit-maximizing monopoly is able to employ group price discrimination. The marginal cost of providing the good is constant and the same in both markets. The marginal revenue the firm earns on the last unit sold in the market with the lower price will be

Accepted Answer

A) greater than the marginal revenue the firm earns on the last unit sold in the market with the higher price. 
B) less than the marginal revenue the firm earns on the last unit sold in the market with the higher price. 
C) equal to the marginal revenue the firm earns on the last unit sold in the market with the higher price. 
D) greater than the marginal cost of the last unit. 
A) greater than the marginal revenue the firm earns on the last unit sold in the market with the higher price. 
B) less than the marginal revenue the firm earns on the last unit sold in the market with the higher price. 
C) equal to the marginal revenue the firm earns on the last unit sold in the market with the higher price. 
D) greater than the marginal cost of the last unit.

Question 9

To buy season tickets at the new Levi's Stadium, 49ers fans have to buy a Personal Seat License (PSL)that then allows them to buy season tickets for the next 30 years. This is an example of

Accepted Answer

A) why the NFL shouldn't have anti-trust exemptions. 
B) two-part pricing, where the PSL is the lump-sum payment. 
C) pure bundling pricing. 
D) positively correlated pricing. 
A) why the NFL shouldn't have anti-trust exemptions. 
B) two-part pricing, where the PSL is the lump-sum payment. 
C) pure bundling pricing. 
D) positively correlated pricing.

Question 10

A monopoly will NOT be able to perfectly price discriminate if

Accepted Answer

A) obtaining information about each buyer's reservation price is too costly. 
B) demand is very elastic. 
C) demand is very inelastic. 
D) resale is impossible. 
A) obtaining information about each buyer's reservation price is too costly. 
B) demand is very elastic. 
C) demand is very inelastic. 
D) resale is impossible.

Question 11

Which of the following is an example of pure bundling?

Accepted Answer

A) A pair of pants 
B) A pizza and beer lunch combo 
C) An automobile 
D) All of the above. 
A) A pair of pants 
B) A pizza and beer lunch combo 
C) An automobile 
D) All of the above.

Question 12

A photograph processing machine company requiring customers who buy a processing machine to purchase chemicals and photographic paper from it is an example of

Accepted Answer

A) bundling. 
B) a requirement tie-in sale. 
C) quantity discrimination. 
D) a two-part tariff. 
A) bundling. 
B) a requirement tie-in sale. 
C) quantity discrimination. 
D) a two-part tariff.

Question 13

Which of the following is an example of bundling?

Accepted Answer

A) A pair of pants 
B) A pizza and beer lunch combo 
C) A bicycle 
D) All of the above. 
A) A pair of pants 
B) A pizza and beer lunch combo 
C) A bicycle 
D) All of the above.

Question 14

A perfect price discriminating monopoly

Accepted Answer

A) captures all consumer surplus. 
B) creates deadweight loss. 
C) increases market inefficiency. 
D) decreases total welfare. 
A) captures all consumer surplus. 
B) creates deadweight loss. 
C) increases market inefficiency. 
D) decreases total welfare.

Question 15

With two-part pricing, a firm

Accepted Answer

A) charges a lump-sum fee that gives the consumer the right to buy a good or service. 
B) must have market power. 
C) must be able to prevent resale. 
D) All of the above. 
A) charges a lump-sum fee that gives the consumer the right to buy a good or service. 
B) must have market power. 
C) must be able to prevent resale. 
D) All of the above.

Question 16

At the current price of a good, Al's consumer surplus equals 15 and Ben's consumer surplus equals 15. By using two-part pricing, a monopolist could increase his profit by

Accepted Answer

A) 8. 
B) 16. 
C) 15. 
D) 30. 
A) 8. 
B) 16. 
C) 15. 
D) 30.

Question 17

Purchasing a season pass to the local symphony

Accepted Answer

A) is an example of first degree price discrimination. 
B) is an example of second degree price discrimination. 
C) is an example of third degree price discrimination. 
D) All of the above. 
A) is an example of first degree price discrimination. 
B) is an example of second degree price discrimination. 
C) is an example of third degree price discrimination. 
D) All of the above.

Question 18

A good example of perfect price discrimination is

Accepted Answer

A) selling concert tickets to individuals on the street corner. 
B) buying concert tickets at the ticket window. 
C) selling concert tickets at the ticket window. 
D) buying a concert ticket on the street corner. 
A) selling concert tickets to individuals on the street corner. 
B) buying concert tickets at the ticket window. 
C) selling concert tickets at the ticket window. 
D) buying a concert ticket on the street corner.

Question 19

Stores such as Costco and Sam's Club require an annual membership before you can shop there. This is a form of

Accepted Answer

A) two-part pricing. 
B) price gouging. 
C) tie-in sales. 
D) anti-competitive behavior. 
A) two-part pricing. 
B) price gouging. 
C) tie-in sales. 
D) anti-competitive behavior.

Question 20

Declining-block quantity discrimination makes sense if

Accepted Answer

A) buyers of smaller quantities are more price sensitive than buyers of larger quantities. 
B) buyers of smaller quantities are less price sensitive than buyers of larger quantities. 
C) demand for the good is perfectly elastic. 
D) the lower price for larger quantities encourages all consumers to purchase the larger quantity. 
A) buyers of smaller quantities are more price sensitive than buyers of larger quantities. 
B) buyers of smaller quantities are less price sensitive than buyers of larger quantities. 
C) demand for the good is perfectly elastic. 
D) the lower price for larger quantities encourages all consumers to purchase the larger quantity.

Price discrimination

When a firm has a monopoly in a market and also perfectly price discriminates, total welfare

Which of the following sellers is most able to perfectly price discriminate?

If a monopoly charges higher prices to consumers who buy smaller quantities than to consumers who buy larger quantities, then

Price discrimination

Peak-load pricing

Customers are usually more willing to pay more for the first unit of a good they purchase than for the second, third, or subsequent units. This implies that

Suppose a profit-maximizing monopoly is able to employ group price discrimination. The marginal cost of providing the good is constant and the same in both markets. The marginal revenue the firm earns on the last unit sold in the market with the lower price will be

To buy season tickets at the new Levi's Stadium, 49ers fans have to buy a Personal Seat License (PSL)that then allows them to buy season tickets for the next 30 years. This is an example of

A monopoly will NOT be able to perfectly price discriminate if

Which of the following is an example of pure bundling?

A photograph processing machine company requiring customers who buy a processing machine to purchase chemicals and photographic paper from it is an example of

Which of the following is an example of bundling?

A perfect price discriminating monopoly

With two-part pricing, a firm

At the current price of a good, Al's consumer surplus equals 15 and Ben's consumer surplus equals 15. By using two-part pricing, a monopolist could increase his profit by

Purchasing a season pass to the local symphony

A good example of perfect price discrimination is

Stores such as Costco and Sam's Club require an annual membership before you can shop there. This is a form of

Declining-block quantity discrimination makes sense if

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters

Exam 10: Pricing With Market Power

Price discrimination

When a firm has a monopoly in a market and also perfectly price discriminates, total welfare

Which of the following sellers is most able to perfectly price discriminate?

If a monopoly charges higher prices to consumers who buy smaller quantities than to consumers who buy larger quantities, then

Price discrimination

Peak-load pricing

Customers are usually more willing to pay more for the first unit of a good they purchase than for the second, third, or subsequent units. This implies that

Suppose a profit-maximizing monopoly is able to employ group price discrimination. The marginal cost of providing the good is constant and the same in both markets. The marginal revenue the firm earns on the last unit sold in the market with the lower price will be

To buy season tickets at the new Levi's Stadium, 49ers fans have to buy a Personal Seat License (PSL)that then allows them to buy season tickets for the next 30 years. This is an example of

A monopoly will NOT be able to perfectly price discriminate if

Which of the following is an example of pure bundling?

A photograph processing machine company requiring customers who buy a processing machine to purchase chemicals and photographic paper from it is an example of

Which of the following is an example of bundling?

A perfect price discriminating monopoly

With two-part pricing, a firm

At the current price of a good, Al's consumer surplus equals 15 and Ben's consumer surplus equals 15. By using two-part pricing, a monopolist could increase his profit by

Purchasing a season pass to the local symphony

A good example of perfect price discrimination is

Stores such as Costco and Sam's Club require an annual membership before you can shop there. This is a form of

Declining-block quantity discrimination makes sense if

Introduction

Supply and Demand

Empirical Methods for Demand Analysis

Consumer Choice

Production

Costs

Firm Organization and Market Structure

Competitive Firms and Markets

Monopoly

Oligopoly and Monopolistic Competition

Game Theory and Business Strategy

Strategies Over Time

Managerial Decision-Making Under Uncertainty

Asymmetric Information

Government and Business

Global Business

Filters