Question 1

-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 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

An electricity provider charges consumers $0.20 per kWh for the first 100 kWh, $0.25 per kWh for the next 50 kWh, and $0.27 per kWh for all subsequent kWH of usage. This would be considered

Accepted Answer

A) an antitrust violation. 
B) an example of increasing-block pricing. 
C) bad business practices. 
D) an example of three-part pricing. 
A) an antitrust violation. 
B) an example of increasing-block pricing. 
C) bad business practices. 
D) an example of three-part pricing.

Question 4

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 5

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 6

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 7

When there is a capacity constraint

Accepted Answer

A) firms face sunk costs when deciding whether or not to expand. 
B) consumers will avoid the producer and go with a firm that has extra capacity. 
C) firms are not maximizing their profits during high season. 
D) firms can use peak-load pricing to increase profits during periods of high demand. 
A) firms face sunk costs when deciding whether or not to expand. 
B) consumers will avoid the producer and go with a firm that has extra capacity. 
C) firms are not maximizing their profits during high season. 
D) firms can use peak-load pricing to increase profits during periods of high demand.

Question 8

If resale is easy, then

Accepted Answer

A) price discrimination won't work, because then only low-priced goods are sold. 
B) consumers' demand curves will shift to the low-priced good. 
C) firms will stop providing the good. 
D) price discrimination results in lower consumer surplus. 
A) price discrimination won't work, because then only low-priced goods are sold. 
B) consumers' demand curves will shift to the low-priced good. 
C) firms will stop providing the good. 
D) price discrimination results in lower consumer surplus.

Question 9

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 yields total revenue of

Accepted Answer

A) $24. 
B) $40. 
C) $16. 
D) $32. 
A) $24. 
B) $40. 
C) $16. 
D) $32.

Question 10

For a theme park two-tier pricing can include a positive admission price and a zero per-ride fee.

Accepted Answer

A) True 
 B)False

Question 11

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 12

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 13

Which of the following helps a monopoly perfectly price discriminate?

Accepted Answer

A) Product demand by each consumer 
B) The product is perishable 
C) The product is personalizable 
D) All of the above. 
A) Product demand by each consumer 
B) The product is perishable 
C) The product is personalizable 
D) All of the above.

Question 14

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 15

A monopoly will NOT be able to perfectly price discriminate if

Accepted Answer

A) each consumer does not reveal her reservation price. 
B) demand is very elastic. 
C) the firm's marginal cost curve is upward sloping. 
D) All of the above. 
A) each consumer does not reveal her reservation price. 
B) demand is very elastic. 
C) the firm's marginal cost curve is upward sloping. 
D) All of the above.

Question 16

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

Question 17

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 18

Which of the following is an example of peak-load pricing?

Accepted Answer

A) Charging less for vacations to Hawaii during December and January 
B) Charging more for electricity on hot days 
C) Setting price equal to marginal cost when there is a capacity constraint 
D) Selling excess capacity at lower prices 
A) Charging less for vacations to Hawaii during December and January 
B) Charging more for electricity on hot days 
C) Setting price equal to marginal cost when there is a capacity constraint 
D) Selling excess capacity at lower prices

Question 19

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

Accepted Answer

A) There are no other firms in the market. 
B) The good is a non-durable. 
C) The good cannot be easily resold. 
D) All of the above. 
A) There are no other firms in the market. 
B) The good is a non-durable. 
C) The good cannot be easily resold. 
D) All of the above.

Question 20

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.

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

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

An electricity provider charges consumers $0.20 per kWh for the first 100 kWh, $0.25 per kWh for the next 50 kWh, and $0.27 per kWh for all subsequent kWH of usage. This would be considered

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

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

Price discrimination

When there is a capacity constraint

If resale is easy, then

For a theme park two-tier pricing can include a positive admission price and a zero per-ride fee.

A monopoly will NOT be able to perfectly price discriminate if

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

Which of the following helps a monopoly perfectly price discriminate?

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

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

Group price discrimination has consumer surplus than under .

Which of the following is an example of peak-load pricing?

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

Unlike perfect price discrimination, group price discrimination does NOT require

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, social welfare equals

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

An electricity provider charges consumers $0.20 per kWh for the first 100 kWh, $0.25 per kWh for the next 50 kWh, and $0.27 per kWh for all subsequent kWH of usage. This would be considered

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

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

Price discrimination

When there is a capacity constraint

If resale is easy, then

For a theme park two-tier pricing can include a positive admission price and a zero per-ride fee.

A monopoly will NOT be able to perfectly price discriminate if

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

Which of the following helps a monopoly perfectly price discriminate?

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

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

Group price discrimination has ________ consumer surplus than under ________.

Which of the following is an example of peak-load pricing?

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

Unlike perfect price discrimination, group price discrimination does NOT require

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

Group price discrimination has consumer surplus than under .