Question 1

Which of the following is an example of mixed bundling?

Accepted Answer

A) a suit jacket 
B) dinner at a buffet restaurant 
C) a desktop computer and monitor 
D) All of the above. 
A) a suit jacket 
B) dinner at a buffet restaurant 
C) a desktop computer and monitor 
D) All of the above.

Question 2

A photograph processing machine company requiring customers who buy a processing machine to purchase chemicals and photographic paper from it is an example of

Accepted Answer

A) bundling. 
B) a requirement tie-in sale. 
C) quantity discrimination. 
D) a two-part tariff. 
A) bundling. 
B) a requirement tie-in sale. 
C) quantity discrimination. 
D) a two-part tariff.

Question 3

-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 4

Two-part pricing offers a mechanism whereby the firm can

Accepted Answer

A) charge two different prices to distinct groups of customers. 
B) collect two times as much from consumers as a single-price monopoly can. 
C) capture some or all of the consumer surplus. 
D) reduce some of its fixed costs. 
A) charge two different prices to distinct groups of customers. 
B) collect two times as much from consumers as a single-price monopoly can. 
C) capture some or all of the consumer surplus. 
D) reduce some of its fixed costs.

Question 5

A difference between a perfectly competitive market equilibrium and a perfect price discrimination equilibrium is that in a competitive market ________, whereas in perfect price discrimination ________.

Accepted Answer

A) all units are sold where P = MC; only the last unit sold is at P = MC 
B) deadweight loss varies depending on the shape of the MC curve; deadweight loss increases 
C) consumers are better off; producers lose some sales due to high prices. 
D) All of the above. 
A) all units are sold where P = MC; only the last unit sold is at P = MC 
B) deadweight loss varies depending on the shape of the MC curve; deadweight loss increases 
C) consumers are better off; producers lose some sales due to high prices. 
D) All of the above.

Question 6

Tie-in sales are most advantageous to the seller when

Accepted Answer

A) the demands for the two goods are negatively correlated. 
B) the demands for the two goods are positively correlated. 
C) the demands for the two goods are unrelated. 
D) there are economies of scope. 
A) the demands for the two goods are negatively correlated. 
B) the demands for the two goods are positively correlated. 
C) the demands for the two goods are unrelated. 
D) there are economies of scope.

Question 7

When firms price discriminate they

Accepted Answer

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

Question 8

Charging a higher price for a motel room to customers with dogs or cats than to customers with no pets is most likely an example of

Accepted Answer

A) first-degree price discrimination. 
B) second-degree price discrimination. 
C) third-degree price discrimination. 
D) actual cost differences. 
A) first-degree price discrimination. 
B) second-degree price discrimination. 
C) third-degree price discrimination. 
D) actual cost differences.

Question 9

A mail-order clothing company offers a discount if customers purchase two shirts instead of only one. This is necessarily an example of quantity discrimination.

Accepted Answer

A) True 
 B)False

Question 10

Nonlinear price discrimination

Accepted Answer

A) sets the price consumers pay based on quantity purchased. 
B) is where the firm sets prices in geometrically or exponentially decreasing price points. 
C) is used in situations where consumers have no reservation prices. 
D) eliminates deadweight loss. 
A) sets the price consumers pay based on quantity purchased. 
B) is where the firm sets prices in geometrically or exponentially decreasing price points. 
C) is used in situations where consumers have no reservation prices. 
D) eliminates deadweight loss.

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

A firm practicing group price discrimination that has constant marginal cost will

Accepted Answer

A) maximize total profit by maximizing profit for each group separately. 
B) will charge the same price to all groups. 
C) will act like a monopoly and treat all groups the same. 
D) sets p = MC. 
A) maximize total profit by maximizing profit for each group separately. 
B) will charge the same price to all groups. 
C) will act like a monopoly and treat all groups the same. 
D) sets p = MC.

Question 13

Textbook publishers often sell the same or essentially identical books in different countries for different prices. Is this an effective form of group price discrimination?

Accepted Answer

A) Yes, because the first sale doctrine does not apply to overseas sales 
B) No, because poor foreign students can't afford the books 
C) No, because people are allowed to buy the books in one country and sell them in another, making money on the arbitrage opportunity 
D) Yes, because the textbooks are actually different since they have a different cover and an "international" label on them 
A) Yes, because the first sale doctrine does not apply to overseas sales 
B) No, because poor foreign students can't afford the books 
C) No, because people are allowed to buy the books in one country and sell them in another, making money on the arbitrage opportunity 
D) Yes, because the textbooks are actually different since they have a different cover and an "international" label on them

Question 14

Many college football teams require a "donation" in order to purchase season tickets. This is an example of

Accepted Answer

A) price gouging. 
B) tie-in sale. 
C) two-part pricing. 
D) anti-competitive behavior. 
A) price gouging. 
B) tie-in sale. 
C) two-part pricing. 
D) anti-competitive behavior.

Question 15

In two-part pricing

Accepted Answer

A) consumers pay a lump-sum for all the goods purchased. 
B) the consumer must pay a lump sum if he buys more than a certain number of units of a good. 
C) a firm charges more for units purchased on the weekend than for those purchased during the week. 
D) the average price paid per unit is higher with a small number of units purchased than if a large number of units is purchased. 
A) consumers pay a lump-sum for all the goods purchased. 
B) the consumer must pay a lump sum if he buys more than a certain number of units of a good. 
C) a firm charges more for units purchased on the weekend than for those purchased during the week. 
D) the average price paid per unit is higher with a small number of units purchased than if a large number of units is purchased.

Question 16

If the demand for air travel were to change so that business travelers and vacationers have the same price elasticity of demand for air travel

Accepted Answer

A) airlines would charge the same price to each type of flyer. 
B) airlines would still charge business flyers a higher fare since the traveler's employer pays anyway. 
C) airlines would be driven out of business. 
D) airlines would counter by charging vacationers a higher fare. 
A) airlines would charge the same price to each type of flyer. 
B) airlines would still charge business flyers a higher fare since the traveler's employer pays anyway. 
C) airlines would be driven out of business. 
D) airlines would counter by charging vacationers a higher fare.

Question 17

Block pricing

Accepted Answer

A) is a form of nonlinear price discrimination. 
B) is pricing where one price is charged for the first block of units purchased, and different prices for subsequent blocks. 
C) can be either use increasing or decreasing prices for blocks purchased. 
D) All of the above. 
A) is a form of nonlinear price discrimination. 
B) is pricing where one price is charged for the first block of units purchased, and different prices for subsequent blocks. 
C) can be either use increasing or decreasing prices for blocks purchased. 
D) All of the above.

Question 18

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

Accepted Answer

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

Which of the following is an example of mixed bundling?

A photograph processing machine company requiring customers who buy a processing machine to purchase chemicals and photographic paper from it is an example of

-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

Two-part pricing offers a mechanism whereby the firm can

A difference between a perfectly competitive market equilibrium and a perfect price discrimination equilibrium is that in a competitive market , whereas in perfect price discrimination .

Tie-in sales are most advantageous to the seller when

When firms price discriminate they

Charging a higher price for a motel room to customers with dogs or cats than to customers with no pets is most likely an example of

A mail-order clothing company offers a discount if customers purchase two shirts instead of only one. This is necessarily an example of quantity discrimination.

Nonlinear price discrimination

All firms can increase profits using price discrimination.

A firm practicing group price discrimination that has constant marginal cost will

Textbook publishers often sell the same or essentially identical books in different countries for different prices. Is this an effective form of group price discrimination?

Many college football teams require a "donation" in order to purchase season tickets. This is an example of

In two-part pricing

If the demand for air travel were to change so that business travelers and vacationers have the same price elasticity of demand for air travel

Block pricing

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

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

Which of the following is an example of mixed bundling?

A photograph processing machine company requiring customers who buy a processing machine to purchase chemicals and photographic paper from it is an example of

-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

Two-part pricing offers a mechanism whereby the firm can

A difference between a perfectly competitive market equilibrium and a perfect price discrimination equilibrium is that in a competitive market ________, whereas in perfect price discrimination ________.

Tie-in sales are most advantageous to the seller when

When firms price discriminate they

Charging a higher price for a motel room to customers with dogs or cats than to customers with no pets is most likely an example of

A mail-order clothing company offers a discount if customers purchase two shirts instead of only one. This is necessarily an example of quantity discrimination.

Nonlinear price discrimination

All firms can increase profits using price discrimination.

A firm practicing group price discrimination that has constant marginal cost will

Textbook publishers often sell the same or essentially identical books in different countries for different prices. Is this an effective form of group price discrimination?

Many college football teams require a "donation" in order to purchase season tickets. This is an example of

In two-part pricing

If the demand for air travel were to change so that business travelers and vacationers have the same price elasticity of demand for air travel

Block pricing

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

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

A difference between a perfectly competitive market equilibrium and a perfect price discrimination equilibrium is that in a competitive market , whereas in perfect price discrimination .