Question 1

Why don't we see firms tie-in the sales of fish filets with the sales of pencils?

Accepted Answer

A)  because the demands for these two goods are positively correlated 
B)  because the demands for these two goods are negatively correlated 
C)  because the demands for these two goods are independent 
D)  It violates the Clean Food Act of 1908. 
A)  because the demands for these two goods are positively correlated 
B)  because the demands for these two goods are negatively correlated 
C)  because the demands for these two goods are independent 
D)  It violates the Clean Food Act of 1908.

Question 2

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 3

Without price discrimination,a firm

Accepted Answer

A)  faces a tradeoff when pricing a good that has customers with different willingness to pay. 
B)  cannot maximize profit. 
C)  has no market power. 
D)  does not get any producer surplus, with all of the surplus going to consumers. 
A)  faces a tradeoff when pricing a good that has customers with different willingness to pay. 
B)  cannot maximize profit. 
C)  has no market power. 
D)  does not get any producer surplus, with all of the surplus going to consumers.

Question 4

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 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)  an illegal act, subject to state and federal prosecution. 
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)  an illegal act, subject to state and federal prosecution.

Question 6

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 7

-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

Question 8

Pizza joints often offer substantially lower prices for pizza picked up at the shop compared to delivered pizza prices.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 9

A consumer's reservation price is the

Accepted Answer

A)  amount she will pay for a hotel or airline reservation. 
B)  minimum amount she will pay for a good or service. 
C)  amount that maximizes her surplus. 
D)  maximum amount she will pay for a good or service. 
A)  amount she will pay for a hotel or airline reservation. 
B)  minimum amount she will pay for a good or service. 
C)  amount that maximizes her surplus. 
D)  maximum amount she will pay for a good or service.

Question 10

A firm that holds a monopoly in both goods stands to gain from a tie-in sale.

Accepted Answer

A)  True. 
B)  False. 
C)  True, which is why anti-trust laws exist. 
D)  False, there are no dual monopolies. 
A)  True. 
B)  False. 
C)  True, which is why anti-trust laws exist. 
D)  False, there are no dual monopolies.

Question 11

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 12

A hotel with market power charges customers who check in before 5:00 pm more than those who check in after 5:00 pm.Those who check in early are much more likely to use the hotel's pool.Explain why this price difference may not be price discrimination.

Accepted Answer

The marginal cost of providing a hotel s

Question 13

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)  consumers receive some surplus; producers take all the surplus 
C)  consumers are better off; income is redistributed away from consumers to producers 
D)  All of the above. 
A)  all units are sold where p=MC; only the last unit sold is at p=MC 
B)  consumers receive some surplus; producers take all the surplus 
C)  consumers are better off; income is redistributed away from consumers to producers 
D)  All of the above.

Question 14

If the price of business broadband is greater than that of residential broadband,all else equal

Accepted Answer

A)  business has greater price elasticity than residential. 
B)  residential has greater price elasticity than business. 
C)  both have positive income elasticity. 
D)  generally speaking, broadband is equally priced. 
A)  business has greater price elasticity than residential. 
B)  residential has greater price elasticity than business. 
C)  both have positive income elasticity. 
D)  generally speaking, broadband is equally priced.

Question 15

Explain why a firm can earn more profit by price discrimination than from setting a uniform price.

Accepted Answer

First,price discrimination allows a firm

Question 16

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 17

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 18

When a firm has a monopoly in a market and also perfectly price discriminates,total welfare

Accepted Answer

A)  is maximized. 
B)  is lower than in a perfectly competitive market. 
C)  is higher than in a perfectly competitive market. 
D)  is minimized. 
A)  is maximized. 
B)  is lower than in a perfectly competitive market. 
C)  is higher than in a perfectly competitive market. 
D)  is minimized.

Question 19

Dynamic pricing

Accepted Answer

A)  is different than perfect price discrimination. 
B)  is used to vary pricing quickly over time as market conditions change. 
C)  is done primarily by Amazon.com. 
D)  All of the above. 
A)  is different than perfect price discrimination. 
B)  is used to vary pricing quickly over time as market conditions change. 
C)  is done primarily by Amazon.com. 
D)  All of the above.

Question 20

With two-part pricing

Accepted Answer

A)  the consumer puts down a deposit and then pays the rest when she picks up the goods purchased. 
B)  the average price paid varies with the number of units purchased. 
C)  the consumer is limited in the number of units that can be purchased. 
D)  consumers are required to buy two units of a good. 
A)  the consumer puts down a deposit and then pays the rest when she picks up the goods purchased. 
B)  the average price paid varies with the number of units purchased. 
C)  the consumer is limited in the number of units that can be purchased. 
D)  consumers are required to buy two units of a good.

Why don't we see firms tie-in the sales of fish filets with the sales of pencils?

A monopoly will not be able to perfectly price discriminate if

Without price discrimination,a firm

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

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

-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?

Pizza joints often offer substantially lower prices for pizza picked up at the shop compared to delivered pizza prices.This may be an attempt at

A consumer's reservation price is the

A firm that holds a monopoly in both goods stands to gain from a tie-in sale.

Reverse auctions

A hotel with market power charges customers who check in before 5:00 pm more than those who check in after 5:00 pm.Those who check in early are much more likely to use the hotel's pool.Explain why this price difference may not be price discrimination.

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 .

If the price of business broadband is greater than that of residential broadband,all else equal

Explain why a firm can earn more profit by price discrimination than from setting a uniform price.

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

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.

When a firm has a monopoly in a market and also perfectly price discriminates,total welfare

Dynamic pricing

With two-part pricing

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

Why don't we see firms tie-in the sales of fish filets with the sales of pencils?

A monopoly will not be able to perfectly price discriminate if

Without price discrimination,a firm

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

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

-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?

Pizza joints often offer substantially lower prices for pizza picked up at the shop compared to delivered pizza prices.This may be an attempt at

A consumer's reservation price is the

A firm that holds a monopoly in both goods stands to gain from a tie-in sale.

Reverse auctions

A hotel with market power charges customers who check in before 5:00 pm more than those who check in after 5:00 pm.Those who check in early are much more likely to use the hotel's pool.Explain why this price difference may not be price discrimination.

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 ________.

If the price of business broadband is greater than that of residential broadband,all else equal

Explain why a firm can earn more profit by price discrimination than from setting a uniform price.

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

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.

When a firm has a monopoly in a market and also perfectly price discriminates,total welfare

Dynamic pricing

With two-part pricing

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 .