Question 1

For a perfect-price-discriminating monopoly, the marginal revenue curve

Accepted Answer

A) lies below the demand curve. 
B) is the demand curve. 
C) varies for each consumer. 
D) is the same as the monopolist's marginal revenue curve. 
A) lies below the demand curve. 
B) is the demand curve. 
C) varies for each consumer. 
D) is the same as the monopolist's marginal revenue curve.

Question 2

The sales of shoes that include shoelaces is a tie-in sale that most likely

Accepted Answer

A) greatly increases the shoe producer's profit. 
B) increases transactions costs. 
C) increases efficiency. 
D) None of the above. 
A) greatly increases the shoe producer's profit. 
B) increases transactions costs. 
C) increases efficiency. 
D) None of the above.

Question 3

Consumers who put a high value on a service

Accepted Answer

A) are better off with perfect price discrimination. 
B) are better off under a single-price monopoly. 
C) are indifferent between perfect price discrimination and a single-price monopoly. 
D) incur deadweight loss under either single-price monopoly or perfect price discrimination. 
A) are better off with perfect price discrimination. 
B) are better off under a single-price monopoly. 
C) are indifferent between perfect price discrimination and a single-price monopoly. 
D) incur deadweight loss under either single-price monopoly or perfect price discrimination.

Question 4

Which of the following is likely hardest to resell?

Accepted Answer

A) An Apple iPod 
B) A discount airline ticket you bought with your frequent flyer miles 
C) A used car 
D) The free spa treatment you won at a raffle 
A) An Apple iPod 
B) A discount airline ticket you bought with your frequent flyer miles 
C) A used car 
D) The free spa treatment you won at a raffle

Question 5

Suppose all individuals are identical, and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 - (1/2)q where p is price in $ per hour and q is hours per month. The firm faces a constant marginal cost of $1. If the firm will charge a monthly access fee plus a per hour rate, the monthly access fee will equal

Accepted Answer

A) $1. 
B) $5. 
C) $8. 
D) $16. 
A) $1. 
B) $5. 
C) $8. 
D) $16.

Question 6

A firm that holds a monopoly in both goods stands to gain from a tie-in sale.

Accepted Answer

A) True. 
B) False. 
C) True, which is why anti-trust laws exist. 
D) False, there are no dual monopolies. 
A) True. 
B) False. 
C) True, which is why anti-trust laws exist. 
D) False, there are no dual monopolies.

Question 7

Price discrimination reveals

Accepted Answer

A) the inherent greed of Western culture. 
B) the inability for regulators to stop unethical practices. 
C) that individuals have different willingness to pay. 
D) that individuals have the same willingness to pay. 
A) the inherent greed of Western culture. 
B) the inability for regulators to stop unethical practices. 
C) that individuals have different willingness to pay. 
D) that individuals have the same willingness to pay.

Question 8

Why doesn't a firm price discriminate based on income levels?

Accepted Answer

A) It would be nearly impossible to conveniently confirm any individual's income level. 
B) It is illegal to ask someone their income level. 
C) It is immoral to price discriminate based on income levels. 
D) They do: It is common practice for firms to price discriminate based on income. 
A) It would be nearly impossible to conveniently confirm any individual's income level. 
B) It is illegal to ask someone their income level. 
C) It is immoral to price discriminate based on income levels. 
D) They do: It is common practice for firms to price discriminate based on income.

Question 9

If a firm offers a senior citizen discount,

Accepted Answer

A) the firm expects the average senior citizen to have a lower price elasticity of demand. 
B) the firm expects the average senior citizen to have a higher price elasticity of demand. 
C) senior citizens may be offended. 
D) it may be prosecuted for discrimination. 
A) the firm expects the average senior citizen to have a lower price elasticity of demand. 
B) the firm expects the average senior citizen to have a higher price elasticity of demand. 
C) senior citizens may be offended. 
D) it may be prosecuted for discrimination.

Question 10

Explain why a firm can earn more profit by price discrimination than from setting a uniform price.

Accepted Answer

First, price discrimination allows a fir

Question 11

All firms can increase profits using price discrimination.

Accepted Answer

A) True, because market demand curves are downward sloping 
B) True, because firms can sell different versions of a product that is just right for an individual consumer 
C) False, because consumers aren't forced to buy a firm's products 
D) False, because some firms are in competitive markets 
A) True, because market demand curves are downward sloping 
B) True, because firms can sell different versions of a product that is just right for an individual consumer 
C) False, because consumers aren't forced to buy a firm's products 
D) False, because some firms are in competitive markets

Question 12

Suppose all individuals are identical, and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 - (1/2)q where p is price in $ per hour and q is hours per month. The firm faces a constant marginal cost of $1. The profit maximizing two-part tariff results in the firm selling

Accepted Answer

A) 4.5 hours. 
B) 10 hours. 
C) 5 hours. 
D) 8 hours. 
A) 4.5 hours. 
B) 10 hours. 
C) 5 hours. 
D) 8 hours.

Question 13

If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible, a firm with market power will

Accepted Answer

A) set a higher price in the market that is more price inelastic. 
B) set a lower price in the market that is more price inelastic. 
C) set price so as to equate the elasticity of demand across markets. 
D) set price equal to marginal cost in both markets. 
A) set a higher price in the market that is more price inelastic. 
B) set a lower price in the market that is more price inelastic. 
C) set price so as to equate the elasticity of demand across markets. 
D) set price equal to marginal cost in both markets.

Question 14

A consumer's reservation price is the

Accepted Answer

A) amount she will pay for a hotel or airline reservation. 
B) minimum amount she will pay for a good or service. 
C) price that maximizes her surplus. 
D) maximum amount she will pay for a good or service. 
A) amount she will pay for a hotel or airline reservation. 
B) minimum amount she will pay for a good or service. 
C) price that maximizes her surplus. 
D) maximum amount she will pay for a good or service.

Question 15

Consumers are better off with pricing in the following order: 1)________; 2)________; 3)________.

Accepted Answer

A) competitive market; perfect price discrimination; single-price monopoly 
B) competitive market; single-price monopoly; perfect price discrimination 
C) single-price monopoly; competitive market; perfect price discrimination 
D) Unable to determine. 
A) competitive market; perfect price discrimination; single-price monopoly 
B) competitive market; single-price monopoly; perfect price discrimination 
C) single-price monopoly; competitive market; perfect price discrimination 
D) Unable to determine.

Question 16

Which of the following conditions must be TRUE so that a firm can profitably price discriminate?

Accepted Answer

A) The firm must be able to identify individual or groups of consumers with different demand curves. 
B) The firm must be able to identify how its consumers' demand curves differ. 
C) The good cannot be easily resold. 
D) All of the above. 
A) The firm must be able to identify individual or groups of consumers with different demand curves. 
B) The firm must be able to identify how its consumers' demand curves differ. 
C) The good cannot be easily resold. 
D) All of the above.

Question 17

Which of the following conditions must be TRUE so that a firm can profitably price discriminate?

Accepted Answer

A) The firm must have market power. 
B) The firm must be able to identify how its consumers' demand curves differ. 
C) The firm must be able to limit or prevent resale. 
D) All of the above. 
A) The firm must have market power. 
B) The firm must be able to identify how its consumers' demand curves differ. 
C) The firm must be able to limit or prevent resale. 
D) All of the above.

Question 18

Pizza joints often offer substantially lower prices for pizza picked up at the shop than for delivered pizzas even though they charge a delivery fee. This may be an attempt at

Accepted Answer

A) perfect price discrimination. 
B) group price discrimination. 
C) quantity discrimination. 
D) second-degree price discrimination. 
A) perfect price discrimination. 
B) group price discrimination. 
C) quantity discrimination. 
D) second-degree price discrimination.

Question 19

-The above figure shows the market for a particular good. If the market is controlled by a perfect-price-discriminating monopoly, producer surplus equals

Accepted Answer

A) A + B + C + D + E. 
B) D + E. 
C) E. 
D) zero. 
A) A + B + C + D + E. 
B) D + E. 
C) E. 
D) zero.

Question 20

If reservation prices are positively correlated, then

Accepted Answer

A) pure bundling cannot increase a firm's profit. 
B) pure bundling can increase a firm's profit. 
C) it is unclear whether or not pure bundling can increase a firm's profit. 
D) consumers lose leverage over firms. 
A) pure bundling cannot increase a firm's profit. 
B) pure bundling can increase a firm's profit. 
C) it is unclear whether or not pure bundling can increase a firm's profit. 
D) consumers lose leverage over firms.

For a perfect-price-discriminating monopoly, the marginal revenue curve

The sales of shoes that include shoelaces is a tie-in sale that most likely

Consumers who put a high value on a service

Which of the following is likely hardest to resell?

A firm that holds a monopoly in both goods stands to gain from a tie-in sale.

Price discrimination reveals

Why doesn't a firm price discriminate based on income levels?

If a firm offers a senior citizen discount,

Explain why a firm can earn more profit by price discrimination than from setting a uniform price.

All firms can increase profits using price discrimination.

If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible, a firm with market power will

A consumer's reservation price is the

Consumers are better off with pricing in the following order: 1); 2); 3).

Which of the following conditions must be TRUE so that a firm can profitably price discriminate?

Which of the following conditions must be TRUE so that a firm can profitably price discriminate?

Pizza joints often offer substantially lower prices for pizza picked up at the shop than for delivered pizzas even though they charge a delivery fee. This may be an attempt at

-The above figure shows the market for a particular good. If the market is controlled by a perfect-price-discriminating monopoly, producer surplus equals

If reservation prices are positively correlated, then

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

For a perfect-price-discriminating monopoly, the marginal revenue curve

The sales of shoes that include shoelaces is a tie-in sale that most likely

Consumers who put a high value on a service

Which of the following is likely hardest to resell?

A firm that holds a monopoly in both goods stands to gain from a tie-in sale.

Price discrimination reveals

Why doesn't a firm price discriminate based on income levels?

If a firm offers a senior citizen discount,

Explain why a firm can earn more profit by price discrimination than from setting a uniform price.

All firms can increase profits using price discrimination.

If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible, a firm with market power will

A consumer's reservation price is the

Consumers are better off with pricing in the following order: 1)________; 2)________; 3)________.

Which of the following conditions must be TRUE so that a firm can profitably price discriminate?

Which of the following conditions must be TRUE so that a firm can profitably price discriminate?

Pizza joints often offer substantially lower prices for pizza picked up at the shop than for delivered pizzas even though they charge a delivery fee. This may be an attempt at

-The above figure shows the market for a particular good. If the market is controlled by a perfect-price-discriminating monopoly, producer surplus equals

If reservation prices are positively correlated, then

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

Consumers are better off with pricing in the following order: 1); 2); 3).