Question 1

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 2

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 3

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 4

If a firm offers a senior citizen discount

Accepted Answer

A)  the firm expects the average senior citizen to have a lower price elasticity of demand. 
B)  the firm expects the average senior citizen to have a higher price elasticity of demand. 
C)  senior citizens may be offended. 
D)  it may be prosecuted for discrimination. 
A)  the firm expects the average senior citizen to have a lower price elasticity of demand. 
B)  the firm expects the average senior citizen to have a higher price elasticity of demand. 
C)  senior citizens may be offended. 
D)  it may be prosecuted for discrimination.

Question 5

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 6

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 7

Bundling is where

Accepted Answer

A)  firms sell multiple separate goods together for a single price. 
B)  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)  firms sell multiple separate goods together for a single price. 
B)  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 8

Which of the following is likely hardest to resell?

Accepted Answer

A)  an Apple iPod 
B)  a discount airline ticket you bought with your frequent flyer miles 
C)  a coupon for a free haircut 
D)  the free facial you won at a raffle 
A)  an Apple iPod 
B)  a discount airline ticket you bought with your frequent flyer miles 
C)  a coupon for a free haircut 
D)  the free facial you won at a raffle

Question 9

Relative to a single-price monopoly,the effect of group price discrimination on social welfare is

Accepted Answer

A)  beneficial. 
B)  detrimental. 
C)  neutral. 
D)  ambiguous. 
A)  beneficial. 
B)  detrimental. 
C)  neutral. 
D)  ambiguous.

Question 10

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 producer'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 producer's products 
D)  false, because some firms are in competitive markets

Question 11

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.If the firm will charge a monthly access fee plus a per hour rate,the monthly access fee will equal

Accepted Answer

A)  $1. 
B)  $5. 
C)  $8. 
D)  $16. 
A)  $1. 
B)  $5. 
C)  $8. 
D)  $16.

Question 12

A firm practicing group price discrimination across two countries sets MR = common MC and therefore

Accepted Answer

A)  price will be the same in both countries. 
B)  price will be twice MR. 
C)  profit will be the same in both countries. 
D)  price will likely be different in each country. 
A)  price will be the same in both countries. 
B)  price will be twice MR. 
C)  profit will be the same in both countries. 
D)  price will likely be different in each country.

Question 13

In two-part pricing with identical consumers,a firm

Accepted Answer

A)  charges a lump-sum fee equal to the consumer surplus. 
B)  sets unit price below marginal cost. 
C)  should go with single-price monopoly pricing to maximize profits. 
D)  Both A and B. 
A)  charges a lump-sum fee equal to the consumer surplus. 
B)  sets unit price below marginal cost. 
C)  should go with single-price monopoly pricing to maximize profits. 
D)  Both A and B.

Question 14

-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.If the marginal cost of installing carpet is a constant $1 per sq yard,what price does Bob charge each segment?

Accepted Answer

A)  $1 in each market 
B)  $5.50 in the residential market and $8 in the business market 
C)  $1 in the residential market and $5 in the business market 
D)  $10 in the residential market and $15 in the business market 
A)  $1 in each market 
B)  $5.50 in the residential market and $8 in the business market 
C)  $1 in the residential market and $5 in the business market 
D)  $10 in the residential market and $15 in the business market

Question 15

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 16

If a firm is to capture all consumer surplus with two-part pricing when customers are different

Accepted Answer

A)  it must be able to charge different access fees. 
B)  it cannot charge different prices for access fees. 
C)  it must set unit price below marginal cost. 
D)  it must set unit price above marginal cost. 
A)  it must be able to charge different access fees. 
B)  it cannot charge different prices for access fees. 
C)  it must set unit price below marginal cost. 
D)  it must set unit price above marginal cost.

Question 17

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 18

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

Accepted Answer

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

Question 19

Which of the following is an example for group price discrimination?

Accepted Answer

A)  a BMW selling for more than a VW 
B)  local residents receiving a discount at the local golf course 
C)  the fact that a razor is cheap and blades are expensive 
D)  a hotel charging more for a room if the customers bring pets 
A)  a BMW selling for more than a VW 
B)  local residents receiving a discount at the local golf course 
C)  the fact that a razor is cheap and blades are expensive 
D)  a hotel charging more for a room if the customers bring pets

Question 20

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.

Group price discrimination has consumer surplus than under .

One reason car dealerships might move away from perfect price discrimination to uniform pricing?

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

If a firm offers a senior citizen discount

In two-part pricing

A good example of perfect price discrimination is

Bundling is where

Which of the following is likely hardest to resell?

Relative to a single-price monopoly,the effect of group price discrimination on social welfare is

All firms can increase profits using price discrimination.

A firm practicing group price discrimination across two countries sets MR = common MC and therefore

In two-part pricing with identical consumers,a firm

-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.If the marginal cost of installing carpet is a constant $1 per sq yard,what price does Bob charge each segment?

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

If a firm is to capture all consumer surplus with two-part pricing when customers are different

If resale is easy,then

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

Which of the following is an example for group price discrimination?

When firms price discriminate they

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

Group price discrimination has ________ consumer surplus than under ________.

One reason car dealerships might move away from perfect price discrimination to uniform pricing?

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

If a firm offers a senior citizen discount

In two-part pricing

A good example of perfect price discrimination is

Bundling is where

Which of the following is likely hardest to resell?

Relative to a single-price monopoly,the effect of group price discrimination on social welfare is

All firms can increase profits using price discrimination.

A firm practicing group price discrimination across two countries sets MR = common MC and therefore

In two-part pricing with identical consumers,a firm

-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.If the marginal cost of installing carpet is a constant $1 per sq yard,what price does Bob charge each segment?

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

If a firm is to capture all consumer surplus with two-part pricing when customers are different

If resale is easy,then

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

Which of the following is an example for group price discrimination?

When firms price discriminate they

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 .