Question 1

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 2

If Ben values good X more than good Y and Catherine values good Y more than good X a firm can increase its profits by

Accepted Answer

A)  charging the same price for both goods. 
B)  bundling the goods. 
C)  selling the goods in a competitive market. 
D)  charging one price per good. 
A)  charging the same price for both goods. 
B)  bundling the goods. 
C)  selling the goods in a competitive market. 
D)  charging one price per good.

Question 3

When firms price discriminate they

Accepted Answer

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

Question 4

Which of the following is an example of bundling?

Accepted Answer

A)  a pair of pants 
B)  a pizza and beer lunch combo 
C)  a bicycle 
D)  All of the above. 
A)  a pair of pants 
B)  a pizza and beer lunch combo 
C)  a bicycle 
D)  All of the above.

Question 5

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 6

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

Accepted Answer

A)  consumers who buy larger quantities have a higher price elasticity of demand. 
B)  consumers who buy larger quantities have a lower price elasticity of demand. 
C)  consumers who buy smaller quantities have a lower price elasticity of demand. 
D)  Both A and C. 
A)  consumers who buy larger quantities have a higher price elasticity of demand. 
B)  consumers who buy larger quantities have a lower price elasticity of demand. 
C)  consumers who buy smaller quantities have a lower price elasticity of demand. 
D)  Both A and C.

Question 7

-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 8

Explain why a monopoly that knows the demand curve of identical consumers can set a two-part price with the lump sum tariff equal to the total amount of potential consumer surplus.

Accepted Answer

The producer wants to set the lump sum p

Question 9

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 10

What is one reason online prices might be considerably lower than brick-and-mortar prices?

Accepted Answer

A)  Online retailers engage in more price discrimination. 
B)  Brick-and-mortar retailers engage in more price discrimination. 
C)  Brick and mortar retailers may have higher costs. 
D)  Online retailers are more likely to have steep demand curves. 
A)  Online retailers engage in more price discrimination. 
B)  Brick-and-mortar retailers engage in more price discrimination. 
C)  Brick and mortar retailers may have higher costs. 
D)  Online retailers are more likely to have steep demand curves.

Question 11

Dynamic pricing

Accepted Answer

A)  is the same as perfect price discrimination. 
B)  is used to vary pricing quickly over time as market conditions change. 
C)  can be used to determine price elasticities of demand. 
D)  All of the above. 
A)  is the same as perfect price discrimination. 
B)  is used to vary pricing quickly over time as market conditions change. 
C)  can be used to determine price elasticities of demand. 
D)  All of the above.

Question 12

Many theme parks charge an entrance fee and a per-ride fee equal to zero.This is an example of

Accepted Answer

A)  bundling. 
B)  two-part pricing. 
C)  multi-market price discrimination. 
D)  perfect price discrimination. 
A)  bundling. 
B)  two-part pricing. 
C)  multi-market price discrimination. 
D)  perfect price discrimination.

Question 13

-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 14

The deadweight loss generated by a perfect-price-discriminating monopoly

Accepted Answer

A)  equals the deadweight loss of a single-price monopoly. 
B)  is greater than the deadweight loss of a single-price monopoly. 
C)  equals zero. 
D)  equals the sum of all lost consumer surplus. 
A)  equals the deadweight loss of a single-price monopoly. 
B)  is greater than the deadweight loss of a single-price monopoly. 
C)  equals zero. 
D)  equals the sum of all lost consumer surplus.

Question 15

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 16

A primary difference between rebates and coupons?

Accepted Answer

A)  Coupons allow individuals to sort themselves into the high-elasticity group after the sale. 
B)  Neither coupons or rebates are redeemed in high numbers. 
C)  Rebates allow individuals to sort themselves into the high-elasticity group after the sale. 
D)  Coupons are legal and rebates are illegal. 
A)  Coupons allow individuals to sort themselves into the high-elasticity group after the sale. 
B)  Neither coupons or rebates are redeemed in high numbers. 
C)  Rebates allow individuals to sort themselves into the high-elasticity group after the sale. 
D)  Coupons are legal and rebates are illegal.

Question 17

Suppose group price discrimination is possible but a firm chooses not to and sets the same price in each market.As a result

Accepted Answer

A)  price elasticity of demand is the same in each market. 
B)  the price-inelastic market will buy zero units. 
C)  marginal revenue in the more price-elastic market exceeds marginal revenue in the less price-elastic market. 
D)  the deadweight loss is less than if the firm price discriminated. 
A)  price elasticity of demand is the same in each market. 
B)  the price-inelastic market will buy zero units. 
C)  marginal revenue in the more price-elastic market exceeds marginal revenue in the less price-elastic market. 
D)  the deadweight loss is less than if the firm price discriminated.

Question 18

Consider a car dealership advertises a three-year lease at $250 per month.When you arrive to apply,you discover that the lease requires a downpayment 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 19

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 20

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.

Price discrimination

If Ben values good X more than good Y and Catherine values good Y more than good X a firm can increase its profits by

When firms price discriminate they

Which of the following is an example of bundling?

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

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

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

Explain why a monopoly that knows the demand curve of identical consumers can set a two-part price with the lump sum tariff equal to the total amount of potential consumer surplus.

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

What is one reason online prices might be considerably lower than brick-and-mortar prices?

Dynamic pricing

Many theme parks charge an entrance fee and a per-ride fee equal to zero.This 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

The deadweight loss generated by a perfect-price-discriminating monopoly

Two-part pricing offers a mechanism whereby the firm can

A primary difference between rebates and coupons?

Suppose group price discrimination is possible but a firm chooses not to and sets the same price in each market.As a result

Consider a car dealership advertises a three-year lease at $250 per month.When you arrive to apply,you discover that the lease requires a downpayment of $3600 dollars.You will undertake the lease if

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

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

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

Price discrimination

If Ben values good X more than good Y and Catherine values good Y more than good X a firm can increase its profits by

When firms price discriminate they

Which of the following is an example of bundling?

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

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

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

Explain why a monopoly that knows the demand curve of identical consumers can set a two-part price with the lump sum tariff equal to the total amount of potential consumer surplus.

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

What is one reason online prices might be considerably lower than brick-and-mortar prices?

Dynamic pricing

Many theme parks charge an entrance fee and a per-ride fee equal to zero.This 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

The deadweight loss generated by a perfect-price-discriminating monopoly

Two-part pricing offers a mechanism whereby the firm can

A primary difference between rebates and coupons?

Suppose group price discrimination is possible but a firm chooses not to and sets the same price in each market.As a result

Consider a car dealership advertises a three-year lease at $250 per month.When you arrive to apply,you discover that the lease requires a downpayment of $3600 dollars.You will undertake the lease if

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

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

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