Question 1

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

Accepted Answer

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

Question 2

Assume you have four tickets to a U2 concert. You decide to sell each of them separately on an auction site such as eBay. Your auctions represent

Accepted Answer

A) price differentiation. 
B) perfect price discrimination amongst those who bid for your tickets. 
C) perfect price discrimination amongst all people who buy tickets for the concert. 
D) maximization of U2's producer surplus. 
A) price differentiation. 
B) perfect price discrimination amongst those who bid for your tickets. 
C) perfect price discrimination amongst all people who buy tickets for the concert. 
D) maximization of U2's producer surplus.

Question 3

In two-part pricing with identical consumers, a firm at least

Accepted Answer

A) charges a lump-sum fee equal to the producer surplus. 
B) sets unit price equal to marginal cost. 
C) cannot maximize profit compared to single-price monopoly pricing. 
D) Both A and B. 
A) charges a lump-sum fee equal to the producer surplus. 
B) sets unit price equal to marginal cost. 
C) cannot maximize profit compared to single-price monopoly pricing. 
D) Both A and B.

Question 4

If a firm sells to two distinct identifiable markets and resale is impossible, why is price discrimination more profitable than setting a single price?

Accepted Answer

If the firm charges a single price on th

Question 5

Why do firms engage in price discrimination?

Accepted Answer

A) to decrease cost 
B) to increase profits 
C) to increase consumer surplus 
D) to prohibit the resale of their products 
A) to decrease cost 
B) to increase profits 
C) to increase consumer surplus 
D) to prohibit the resale of their products

Question 6

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

Accepted Answer

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

Question 7

If a firm faces a flat demand curve,

Accepted Answer

A) it cannot engage in price discrimination. 
B) it can only engage in two-part tariffs. 
C) it can only engage in perfect price discrimination. 
D) None of the above. 
A) it cannot engage in price discrimination. 
B) it can only engage in two-part tariffs. 
C) it can only engage in perfect price discrimination. 
D) None of the above.

Question 8

Unlike perfect price discrimination, group price discrimination does NOT require

Accepted Answer

A) firms to have market power. 
B) the ability to distinguish between groups with different reservation prices. 
C) the ability to limit or prevent resale. 
D) None of the above. 
A) firms to have market power. 
B) the ability to distinguish between groups with different reservation prices. 
C) the ability to limit or prevent resale. 
D) None of the above.

Question 9

If a market is controlled by a perfect-price-discriminating monopoly, then

Accepted Answer

A) a deadweight loss is generated. 
B) there is no consumer surplus. 
C) consumer surplus is the same as under perfect competition. 
D) output is less than that of a single-price monopoly. 
A) a deadweight loss is generated. 
B) there is no consumer surplus. 
C) consumer surplus is the same as under perfect competition. 
D) output is less than that of a single-price monopoly.

Question 10

Firms are better off using rebates rather than just lowering the price of a good because

Accepted Answer

A) people view the firm in a positive light because now poorer people will be able to afford their good. 
B) customers overestimate the value of the rebate and so buy more of the good, making profits higher than if they just lowered the price. 
C) only those who place a low value on their time or are price sensitive actually redeem the rebate, making profits higher than if they just lowered the price. 
D) lowering the price is inefficient and creates additional deadweight loss. 
A) people view the firm in a positive light because now poorer people will be able to afford their good. 
B) customers overestimate the value of the rebate and so buy more of the good, making profits higher than if they just lowered the price. 
C) only those who place a low value on their time or are price sensitive actually redeem the rebate, making profits higher than if they just lowered the price. 
D) lowering the price is inefficient and creates additional deadweight loss.

Question 11

Firms can only use one form of price discrimination.

Accepted Answer

A) True 
 B)False

Question 12

A perfect price discriminator

Accepted Answer

A) charges each buyer her reservation price. 
B) charges different prices to each customer based upon different costs of delivery. 
C) generates a deadweight loss to society. 
D) charges lower prices to customers who buy greater quantities. 
A) charges each buyer her reservation price. 
B) charges different prices to each customer based upon different costs of delivery. 
C) generates a deadweight loss to society. 
D) charges lower prices to customers who buy greater quantities.

Question 13

Consider a car dealership that advertises a three-year lease at $250 per month. When you arrive to apply, you discover that the lease requires a down payment of $3600 dollars. You will undertake the lease if

Accepted Answer

A) you value the lease at least $350 per month. 
B) you value the lease at least $250 per month, the $3600 is a sunk cost. 
C) you value the lease less than $350 per month. 
D) you value buying a new car at $400 per month. 
A) you value the lease at least $350 per month. 
B) you value the lease at least $250 per month, the $3600 is a sunk cost. 
C) you value the lease less than $350 per month. 
D) you value buying a new car at $400 per month.

Question 14

Coupons represent a form of price discrimination because they offer a low-cost way for firms to

Accepted Answer

A) identify customers with apparently more elastic demand and offer them a lower price. 
B) retain loyal customers who are not price sensitive. 
C) offer discounts to consumers who buy larger quantities. 
D) perfectly price discriminate. 
A) identify customers with apparently more elastic demand and offer them a lower price. 
B) retain loyal customers who are not price sensitive. 
C) offer discounts to consumers who buy larger quantities. 
D) perfectly price discriminate.

Question 15

-Bob is the only carpet installer in a small isolated town. The above figure shows the demand curves of two distinct groups of customers-residential and business. Bob is likely to price discriminate because

Accepted Answer

A) elasticities differ across markets. 
B) the installation of carpets cannot be resold. 
C) Bob can probably identify which consumers belong to which segment. 
D) All of the above. 
A) elasticities differ across markets. 
B) the installation of carpets cannot be resold. 
C) Bob can probably identify which consumers belong to which segment. 
D) All of the above.

Question 16

Consumers who place a high value on a good 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 17

When a firm uses surge or dynamic pricing,

Accepted Answer

A) it changes price in "real time" according to market demand. 
B) consumers pay less during peak times. 
C) the firm sets the price based on the previous day's demand. 
D) it commits to a set pattern of pricing. 
A) it changes price in "real time" according to market demand. 
B) consumers pay less during peak times. 
C) the firm sets the price based on the previous day's demand. 
D) it commits to a set pattern of pricing.

Question 18

The more block prices a monopoly can set instead of setting a single price, the

Accepted Answer

A) smaller the deadweight loss. 
B) the more producer surplus. 
C) the larger the total welfare. 
D) All of the above. 
A) smaller the deadweight loss. 
B) the more producer surplus. 
C) the larger the total welfare. 
D) All of the above.

Question 19

Group price discrimination has ________ consumer surplus than under ________.

Accepted Answer

A) more; perfect competition 
B) less; perfect competition 
C) more; an elastic demand curve 
D) less; single-price monopoly 
A) more; perfect competition 
B) less; perfect competition 
C) more; an elastic demand curve 
D) less; single-price monopoly

Question 20

When firms price discriminate, they

Accepted Answer

A) sell to new consumers who would not have bought at the profit-maximizing uniform price but lose sales to existing consumers because of the higher prices. 
B) sell to new consumers that would not have bought at the profit-maximizing uniform price. 
C) lose surplus from consumers who would have bought at the profit-maximizing uniform price. 
D) None of the above. 
A) sell to new consumers who would not have bought at the profit-maximizing uniform price but lose sales to existing consumers because of the higher prices. 
B) sell to new consumers that would not have bought at the profit-maximizing uniform price. 
C) lose surplus from consumers who would have bought at the profit-maximizing uniform price. 
D) None of the above.

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

Assume you have four tickets to a U2 concert. You decide to sell each of them separately on an auction site such as eBay. Your auctions represent

In two-part pricing with identical consumers, a firm at least

If a firm sells to two distinct identifiable markets and resale is impossible, why is price discrimination more profitable than setting a single price?

Why do firms engage in price discrimination?

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

If a firm faces a flat demand curve,

Unlike perfect price discrimination, group price discrimination does NOT require

If a market is controlled by a perfect-price-discriminating monopoly, then

Firms are better off using rebates rather than just lowering the price of a good because

Firms can only use one form of price discrimination.

A perfect price discriminator

Consider a car dealership that advertises a three-year lease at $250 per month. When you arrive to apply, you discover that the lease requires a down payment of $3600 dollars. You will undertake the lease if

Coupons represent a form of price discrimination because they offer a low-cost way for firms to

-Bob is the only carpet installer in a small isolated town. The above figure shows the demand curves of two distinct groups of customers-residential and business. Bob is likely to price discriminate because

Consumers who place a high value on a good are better off with pricing in the following order: 1); 2); 3).

When a firm uses surge or dynamic pricing,

The more block prices a monopoly can set instead of setting a single price, the

Group price discrimination has consumer surplus than under .

When firms price discriminate, they

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

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

Assume you have four tickets to a U2 concert. You decide to sell each of them separately on an auction site such as eBay. Your auctions represent

In two-part pricing with identical consumers, a firm at least

If a firm sells to two distinct identifiable markets and resale is impossible, why is price discrimination more profitable than setting a single price?

Why do firms engage in price discrimination?

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

If a firm faces a flat demand curve,

Unlike perfect price discrimination, group price discrimination does NOT require

If a market is controlled by a perfect-price-discriminating monopoly, then

Firms are better off using rebates rather than just lowering the price of a good because

Firms can only use one form of price discrimination.

A perfect price discriminator

Consider a car dealership that advertises a three-year lease at $250 per month. When you arrive to apply, you discover that the lease requires a down payment of $3600 dollars. You will undertake the lease if

Coupons represent a form of price discrimination because they offer a low-cost way for firms to

-Bob is the only carpet installer in a small isolated town. The above figure shows the demand curves of two distinct groups of customers-residential and business. Bob is likely to price discriminate because

Consumers who place a high value on a good are better off with pricing in the following order: 1)________; 2)________; 3)________.

When a firm uses surge or dynamic pricing,

The more block prices a monopoly can set instead of setting a single price, the

Group price discrimination has ________ consumer surplus than under ________.

When firms price discriminate, they

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 who place a high value on a good are better off with pricing in the following order: 1); 2); 3).

Group price discrimination has consumer surplus than under .