Question 1

Disneyland price discriminates because

Accepted Answer

A) everyone loves going to The Happiest Place on Earth, so they'll pay whatever Disneyland wants to charge. 
B) children are cheaper to service, so Disneyland can charge lower prices for a children's ticket. 
C) only a certain number of people can get into Disneyland at any given time, limiting supply, and the market demand curve is nearly completely inelastic. 
D) local residents likely wouldn't go to the park at prices Disneyland can charge for tourists, which would reduce Disneyland's profits. 
A) everyone loves going to The Happiest Place on Earth, so they'll pay whatever Disneyland wants to charge. 
B) children are cheaper to service, so Disneyland can charge lower prices for a children's ticket. 
C) only a certain number of people can get into Disneyland at any given time, limiting supply, and the market demand curve is nearly completely inelastic. 
D) local residents likely wouldn't go to the park at prices Disneyland can charge for tourists, which would reduce Disneyland's profits.

Question 2

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 3

What is one reason car dealerships might move away from perfect price discrimination to uniform pricing?

Accepted Answer

A) Perfect price discrimination doesn't work. 
B) Transaction costs erode the profit of perfect price discrimination. 
C) Consumers are ill-informed and tend to complain too much. 
D) Uniform pricing is always more profitable and more fair as well. 
A) Perfect price discrimination doesn't work. 
B) Transaction costs erode the profit of perfect price discrimination. 
C) Consumers are ill-informed and tend to complain too much. 
D) Uniform pricing is always more profitable and more fair as well.

Question 4

Reverse auctions

Accepted Answer

A) require customers to fly at unpopular times. 
B) allow firms to identify customers that have very elastic demand curves. 
C) Both A and B. 
D) are used to keep high paying customers from spending too little money. 
A) require customers to fly at unpopular times. 
B) allow firms to identify customers that have very elastic demand curves. 
C) Both A and B. 
D) are used to keep high paying customers from spending too little money.

Question 5

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 6

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 7

A specialized rice grower sells rice in two markets, the United States and Japan, and the marginal cost is the same in both markets. The price elasticity of demand in the United States is -2.0, and the price elasticity of demand in Japan is -1.5. If the grower practices group price discrimination, which country's consumers will pay a higher price and by how much?

Accepted Answer

PUS(1 + 1/-2)= PJ(1 + 1/-1.5).

Question 8

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 9

Bundling

Accepted Answer

A) is when firms sell multiple separate goods together for a single price. 
B) is where a firm wraps its fragile goods in special packaging and charges a higher price than if the goods are put into regular packaging. 
C) increases transaction costs for consumers. 
D) is illegal in most U.S. states. 
A) is when firms sell multiple separate goods together for a single price. 
B) is where a firm wraps its fragile goods in special packaging and charges a higher price than if the goods are put into regular packaging. 
C) increases transaction costs for consumers. 
D) is illegal in most U.S. states.

Question 10

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 11

When firms price discriminate they turn ________ into ________.

Accepted Answer

A) producer surplus, revenue 
B) consumer surplus, profit 
C) revenue, producer surplus 
D) producer surplus, consumer surplus 
A) producer surplus, revenue 
B) consumer surplus, profit 
C) revenue, producer surplus 
D) producer surplus, consumer surplus

Question 12

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 13

Firms price discriminate to maximize total revenue.

Accepted Answer

A) True 
 B)False

Question 14

At the current price of a good Al's consumer surplus equals 8 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 15

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. Potential consumer surplus equals

Accepted Answer

A) $4. 
B) $8. 
C) $16. 
D) $32. 
A) $4. 
B) $8. 
C) $16. 
D) $32.

Question 16

If you purchase one pound of apples the price is $1.50 per pound. If you buy a five pound bag of apples, the cost is $5.00. This is most likely an example of

Accepted Answer

A) quantity discounts. 
B) lower marginal cost. 
C) lower marginal benefit. 
D) price gouging. 
A) quantity discounts. 
B) lower marginal cost. 
C) lower marginal benefit. 
D) price gouging.

Question 17

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 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

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 20

The above figure shows the market for a given product. Defining welfare as consumer surplus plus producer surplus, calculate the social welfare associated with perfect competition, single-price monopoly, and a perfect-price-discriminating monopoly. Which market structure(s)maximize social welfare?

Accepted Answer

Social welfare equals
Perfect competitio

Disneyland price discriminates because

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

What is one reason car dealerships might move away from perfect price discrimination to uniform pricing?

Reverse auctions

Price discrimination reveals

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

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

Bundling

When firms price discriminate they turn into .

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

Firms price discriminate to maximize total revenue.

At the current price of a good Al's consumer surplus equals 8 and Ben's consumer surplus equals 15. By using two-part pricing a monopolist could increase his profit by

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. Potential consumer surplus equals

If you purchase one pound of apples the price is $1.50 per pound. If you buy a five pound bag of apples, the cost is $5.00. This is most likely an example of

Price discrimination

A good example of perfect price discrimination is

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 given product. Defining welfare as consumer surplus plus producer surplus, calculate the social welfare associated with perfect competition, single-price monopoly, and a perfect-price-discriminating monopoly. Which market structure(s)maximize social welfare?

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

Disneyland price discriminates because

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

What is one reason car dealerships might move away from perfect price discrimination to uniform pricing?

Reverse auctions

Price discrimination reveals

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

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

Bundling

When firms price discriminate they turn ________ into ________.

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

Firms price discriminate to maximize total revenue.

At the current price of a good Al's consumer surplus equals 8 and Ben's consumer surplus equals 15. By using two-part pricing a monopolist could increase his profit by

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. Potential consumer surplus equals

If you purchase one pound of apples the price is $1.50 per pound. If you buy a five pound bag of apples, the cost is $5.00. This is most likely an example of

Price discrimination

A good example of perfect price discrimination is

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 given product. Defining welfare as consumer surplus plus producer surplus, calculate the social welfare associated with perfect competition, single-price monopoly, and a perfect-price-discriminating monopoly. Which market structure(s)maximize social welfare?

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

When firms price discriminate they turn into .