Question 1

The network of devices directly communicating data to a computer without a person having to enter the data is known as

Accepted Answer

A) Big Data. 
B) Artificial Intelligence. 
C) the Internet of Things. 
D) Synergistic Communications. 
A) Big Data. 
B) Artificial Intelligence. 
C) the Internet of Things. 
D) Synergistic Communications.

Question 2

When a firm charges $4.95 instead of $5.00, what do economists call this pricing strategy?

Accepted Answer

A) cost-plus pricing 
B) indirect pricing 
C) odd pricing 
D) unusual pricing 
A) cost-plus pricing 
B) indirect pricing 
C) odd pricing 
D) unusual pricing

Question 3

Are restaurant coupons a form of price discrimination? Why or why not?

Accepted Answer

Yes, coupons are a form of price discrim

Question 4

Arbitrage refers to the act of

Accepted Answer

A) resolving a dispute in front of an arbitrator instead of a court of law. 
B) buying a product in one market at a low price and reselling in another market at a higher price. 
C) trading in the foreign exchange market. 
D) suing a producer for illegal business practices. 
A) resolving a dispute in front of an arbitrator instead of a court of law. 
B) buying a product in one market at a low price and reselling in another market at a higher price. 
C) trading in the foreign exchange market. 
D) suing a producer for illegal business practices.

Question 5

Which of the following statements about two-part tariffs is false?

Accepted Answer

A) Because each individual has a different individual demand curve, if there is just one entrance fee some consumers will be able to reap some consumer surplus. 
B) The producer cannot capture the entire consumer surplus because the entrance fee might discourage some potential consumers even though they would have been willing to pay a lesser entrance fee. 
C) A two-part tariff allows a producer to capture the entire consumer surplus. 
D) For a two-part tariff to be successful, the producer must be able to identify two distinct customer groups. 
A) Because each individual has a different individual demand curve, if there is just one entrance fee some consumers will be able to reap some consumer surplus. 
B) The producer cannot capture the entire consumer surplus because the entrance fee might discourage some potential consumers even though they would have been willing to pay a lesser entrance fee. 
C) A two-part tariff allows a producer to capture the entire consumer surplus. 
D) For a two-part tariff to be successful, the producer must be able to identify two distinct customer groups.

Question 6

In the real world,

Accepted Answer

A) all sellers charge one price equal to the marginal cost of production. 
B) profitable sellers will set one price based on the average elasticity of demand of buyers. 
C) many firms charge different prices based on consumers' willingness to pay. 
D) all sellers charge one price set by the government. 
A) all sellers charge one price equal to the marginal cost of production. 
B) profitable sellers will set one price based on the average elasticity of demand of buyers. 
C) many firms charge different prices based on consumers' willingness to pay. 
D) all sellers charge one price set by the government.

Question 7

Consider three pricing strategies that the firm can pursue:
A.optimal two-part tariff pricing
B.perfect price discrimination
C.single-price monopoly pricing.
Of these three strategies, which is least likely to benefit society as a whole?

Accepted Answer

A) a two-part tariff pricing because consumers have to pay a fixed fee in addition to a per-unit price 
B) perfect price discrimination because those willing to pay higher prices are forced to subsidize those who are not 
C) Both perfect price discrimination and two-part tariff pricing do not benefit society because the entire consumer surplus is extracted by the producer. 
D) single-price monopoly pricing because there are mutually beneficial trades (between consumers and seller)that are not exploited 
A) a two-part tariff pricing because consumers have to pay a fixed fee in addition to a per-unit price 
B) perfect price discrimination because those willing to pay higher prices are forced to subsidize those who are not 
C) Both perfect price discrimination and two-part tariff pricing do not benefit society because the entire consumer surplus is extracted by the producer. 
D) single-price monopoly pricing because there are mutually beneficial trades (between consumers and seller)that are not exploited

Question 8

Price discrimination is a rational strategy for a profit-maximizing firm when

Accepted Answer

A) it is possible to engage in arbitrage across market segments. 
B) it is not possible to segment consumers into identifiable markets. 
C) there is no opportunity for arbitrage across market segments. 
D) firms want to increase the amount of consumer surplus received by its customers. 
A) it is possible to engage in arbitrage across market segments. 
B) it is not possible to segment consumers into identifiable markets. 
C) there is no opportunity for arbitrage across market segments. 
D) firms want to increase the amount of consumer surplus received by its customers.

Question 9

Which of the following statements is true about optimal two-part tariff and perfect price discrimination for a given demand curve?

Accepted Answer

A) The total revenue received under the two pricing schedules is the same. 
B) The total revenue received under an optimal two-part tariff exceeds that received under perfect price discrimination. 
C) The total revenue received under an optimal two-part tariff is less than that received under perfect price discrimination. 
D) The total revenue received under an optimal two-part tariff could be greater than, less than, or equal to that received under perfect price discrimination, depending on the fixed-fee portion of the two-part tariff. 
A) The total revenue received under the two pricing schedules is the same. 
B) The total revenue received under an optimal two-part tariff exceeds that received under perfect price discrimination. 
C) The total revenue received under an optimal two-part tariff is less than that received under perfect price discrimination. 
D) The total revenue received under an optimal two-part tariff could be greater than, less than, or equal to that received under perfect price discrimination, depending on the fixed-fee portion of the two-part tariff.

Question 10

In an optimal two-part tariff pricing schedule, consumer surplus is zero.

Accepted Answer

A) True 
 B)False

Question 11

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?

Accepted Answer

A) 240 units 
B) 320 units 
C) 480 units 
D) 560 units 
A) 240 units 
B) 320 units 
C) 480 units 
D) 560 units

Question 12

Article Summary
Brandeis University economist Benjamin Shiller has written a paper which explains how Netflix could combine demographic data with customers' Web browsing habits to more accurately predict how much a customer would be willing to pay for a Netflix subscription, and how using this method of first-degree price discrimination would generate higher profits. Shiller explains that the more information a company has about its customers, the better it is at being able to set prices to increase profits. As he stated in his paper, "Using all variables to tailor prices, one can yield variable profits 1.39 percent higher than variable profits obtained using non-tailored 2nd degree price-discrimination. Using demographics alone to tailor prices raises profits by much less, yielding variable profits only 0.14% higher than variable profits attainable under 2nd degree [price discrimination]."
Source: Brian Fung, "How Netflix could use Big Data to make twice as much money off you," Washington Post, September 4, 2013.
-Refer to the Article Summary.If Netflix chose to use Shiller's pricing method,

Accepted Answer

A) consumer surplus would be zero. 
B) producer surplus would be zero. 
C) deadweight loss would be maximized. 
D) consumer surplus, producer surplus, and deadweight loss would all be equal. 
A) consumer surplus would be zero. 
B) producer surplus would be zero. 
C) deadweight loss would be maximized. 
D) consumer surplus, producer surplus, and deadweight loss would all be equal.

Question 13

Harry attended a baseball card show in New York City where he bought a number of rookie cards of Pittsburgh Pirates baseball players from the 1950s and 1960s.Harry then sold the cards in Pittsburgh, Harry's hometown, where he knew the cards sold for higher prices.The profits Harry earned from these transactions are called

Accepted Answer

A) arbitrage profits. 
B) normal profits. 
C) accounting profits. 
D) implicit profits. 
A) arbitrage profits. 
B) normal profits. 
C) accounting profits. 
D) implicit profits.

Question 14

Charging different prices to different consumers for the same product when the price differences are not due to differences in cost is called arbitrage.

Accepted Answer

A) True 
 B)False

Question 15

Early adopters are consumers who will pay a high price to be among the first to own new products.

Accepted Answer

A) True 
 B)False

Question 16

If a firm could practice perfect price discrimination, it would

Accepted Answer

A) allow resale of its product. 
B) charge every buyer a different price. 
C) charge a price based on the quantity of a product bought. 
D) use odd pricing. 
A) allow resale of its product. 
B) charge every buyer a different price. 
C) charge a price based on the quantity of a product bought. 
D) use odd pricing.

Question 17

Consider three pricing strategies that the firm can pursue:
A.optimal two-part tariff pricing
B.perfect price discrimination
C.single-price monopoly pricing
Of these three strategies, which is most beneficial to society as a whole?

Accepted Answer

A) Both perfect price discrimination and a two-part tariff pricing are equally beneficial in that the marginal benefit of the last unit sold equals the marginal cost of producing that unit. 
B) only perfect price discrimination because this pricing method eliminates deadweight loss 
C) single-price monopoly pricing because consumers enjoy at least some consumer surplus 
D) only two-part tariff pricing because the per-unit portion of the price is set equal to marginal cost 
A) Both perfect price discrimination and a two-part tariff pricing are equally beneficial in that the marginal benefit of the last unit sold equals the marginal cost of producing that unit. 
B) only perfect price discrimination because this pricing method eliminates deadweight loss 
C) single-price monopoly pricing because consumers enjoy at least some consumer surplus 
D) only two-part tariff pricing because the per-unit portion of the price is set equal to marginal cost

Question 18

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

Accepted Answer

A) consumers are not sensitive to prices. 
B) arbitrage will quickly eliminate price differences. 
C) firms differentiate products in many ways, for example, higher-priced fast food restaurants may offer better service. 
D) their demand is perfectly inelastic. 
A) consumers are not sensitive to prices. 
B) arbitrage will quickly eliminate price differences. 
C) firms differentiate products in many ways, for example, higher-priced fast food restaurants may offer better service. 
D) their demand is perfectly inelastic.

Question 19

What is the difference between price discrimination and other forms of discrimination?

Accepted Answer

Discrimination based on race or gender a

Question 20

Buying at a low price in one market and reselling at a higher price in another market will

Accepted Answer

A) not generate any profit because of transportation costs. 
B) not generate any profit because of transactions costs. 
C) eventually eliminate all of the price differences. 
D) eventually eliminate most, but not necessarily all, of the price differences. 
A) not generate any profit because of transportation costs. 
B) not generate any profit because of transactions costs. 
C) eventually eliminate all of the price differences. 
D) eventually eliminate most, but not necessarily all, of the price differences.

The network of devices directly communicating data to a computer without a person having to enter the data is known as

When a firm charges $4.95 instead of $5.00, what do economists call this pricing strategy?

Are restaurant coupons a form of price discrimination? Why or why not?

Arbitrage refers to the act of

Which of the following statements about two-part tariffs is false?

In the real world,

Consider three pricing strategies that the firm can pursue: A.optimal two-part tariff pricing B.perfect price discrimination C.single-price monopoly pricing. Of these three strategies, which is least likely to benefit society as a whole?

Price discrimination is a rational strategy for a profit-maximizing firm when

Which of the following statements is true about optimal two-part tariff and perfect price discrimination for a given demand curve?

In an optimal two-part tariff pricing schedule, consumer surplus is zero.

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?

Charging different prices to different consumers for the same product when the price differences are not due to differences in cost is called arbitrage.

Early adopters are consumers who will pay a high price to be among the first to own new products.

If a firm could practice perfect price discrimination, it would

Consider three pricing strategies that the firm can pursue: A.optimal two-part tariff pricing B.perfect price discrimination C.single-price monopoly pricing Of these three strategies, which is most beneficial to society as a whole?

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

What is the difference between price discrimination and other forms of discrimination?

Buying at a low price in one market and reselling at a higher price in another market will

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters

Exam 16: Pricing Strategy

The network of devices directly communicating data to a computer without a person having to enter the data is known as

When a firm charges $4.95 instead of $5.00, what do economists call this pricing strategy?

Are restaurant coupons a form of price discrimination? Why or why not?

Arbitrage refers to the act of

Which of the following statements about two-part tariffs is false?

In the real world,

Consider three pricing strategies that the firm can pursue: A.optimal two-part tariff pricing B.perfect price discrimination C.single-price monopoly pricing. Of these three strategies, which is least likely to benefit society as a whole?

Price discrimination is a rational strategy for a profit-maximizing firm when

Which of the following statements is true about optimal two-part tariff and perfect price discrimination for a given demand curve?

In an optimal two-part tariff pricing schedule, consumer surplus is zero.

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?

Charging different prices to different consumers for the same product when the price differences are not due to differences in cost is called arbitrage.

Early adopters are consumers who will pay a high price to be among the first to own new products.

If a firm could practice perfect price discrimination, it would

Consider three pricing strategies that the firm can pursue: A.optimal two-part tariff pricing B.perfect price discrimination C.single-price monopoly pricing Of these three strategies, which is most beneficial to society as a whole?

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

What is the difference between price discrimination and other forms of discrimination?

Buying at a low price in one market and reselling at a higher price in another market will

Economics: Foundations and Models

Trade-Offs, Comparative Advantage, and the Market System

Where Prices Come From: the Interaction of Demand and Supply

Economic Efficiency, Government Price Setting, and Taxes

Externalities, Environmental Policy, and Public Goods

Elasticity: the Responsiveness of Demand and Supply

The Economics of Health Care

Firms, the Stock Market, and Corporate Governance

Comparative Advantage and the Gains From International Trade

Consumer Choice and Behavioral Economics

Technology, Production, and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: the Competitive Model in a

Oligopoly: Firms in Less Competitive Markets

Monopoly and Antitrust Policy

The Markets for Labor and Other Factors of Production

Public Choice, Taxes, and the Distribution of Income

Filters