Question 1

For a theme park two-tier pricing can include a positive admission price and a zero per-ride fee.

Accepted Answer

A) True 
 B)False

Question 2

Firms are better off using rebates rather than just lowering the price of a good because

Accepted Answer

A)  people view the firm in a positive light because now poorer people will be able to afford their good. 
B)  customers overestimate the value of the rebate and so buy more of the good, making profits higher than if they just lowered the price. 
C)  only those who place a low value on their time or are price sensitive actually redeem the rebate, making profits higher than if they just lowered the price. 
D)  lowering the price is inefficient and creates additional deadweight loss. 
A)  people view the firm in a positive light because now poorer people will be able to afford their good. 
B)  customers overestimate the value of the rebate and so buy more of the good, making profits higher than if they just lowered the price. 
C)  only those who place a low value on their time or are price sensitive actually redeem the rebate, making profits higher than if they just lowered the price. 
D)  lowering the price is inefficient and creates additional deadweight loss.

Question 3

Explain using welfare measures whether consumers prefer a single price monopoly or a perfectly price discriminating monopoly.

Accepted Answer

Consumers prefer a single pric

Question 4

A weapons producer sells guns to two countries that are at war with each other.The guns can be produced at a constant marginal cost of $10.The demand for guns from the two countries can be represented as:
   = 100 - 2p
   = 80 - 4p
Why is the weapons producer able to price discriminate?
What price will it charge to each country?

Accepted Answer

The firm can price discriminate because

Question 5

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 6

Why doesn't a firm price discriminate based on income levels?

Accepted Answer

A)  It would be nearly impossible to conveniently confirm any individual's income level. 
B)  It is illegal to ask someone their income levels. 
C)  It is immoral to price discriminate based on income levels. 
D)  It is common practice for firms to price discriminate based on income. 
A)  It would be nearly impossible to conveniently confirm any individual's income level. 
B)  It is illegal to ask someone their income levels. 
C)  It is immoral to price discriminate based on income levels. 
D)  It is common practice for firms to price discriminate based on income.

Question 7

With peak-load pricing,a firm

Accepted Answer

A)  charges more for a good during periods of high demand. 
B)  charges more for a hotel room the higher up the mountain it is. 
C)  charges less for a good during periods of high demand, because of regulatory reasons. 
D)  is generally used during January and February. 
A)  charges more for a good during periods of high demand. 
B)  charges more for a hotel room the higher up the mountain it is. 
C)  charges less for a good during periods of high demand, because of regulatory reasons. 
D)  is generally used during January and February.

Question 8

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 9

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 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 yields total revenue of

Accepted Answer

A)  $24. 
B)  $40. 
C)  $16. 
D)  $32. 
A)  $24. 
B)  $40. 
C)  $16. 
D)  $32.

Question 11

While price discrimination is possible between two markets it is not possible in more than two.

Accepted Answer

A) True 
 B)False

Question 12

If a firm faces a flat demand curve

Accepted Answer

A)  it cannot engage in price discrimination. 
B)  it can only engage in two-part tariffs. 
C)  it can only engage in perfect price discrimination. 
D)  None of the above. 
A)  it cannot engage in price discrimination. 
B)  it can only engage in two-part tariffs. 
C)  it can only engage in perfect price discrimination. 
D)  None of the above.

Question 13

Which of the following sellers is most able to perfectly price discriminate?

Accepted Answer

A)  a college or university 
B)  the post office 
C)  a clothing store 
D)  a grocery supermarket 
A)  a college or university 
B)  the post office 
C)  a clothing store 
D)  a grocery supermarket

Question 14

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

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 16

Purchasing a season pass to the local symphony

Accepted Answer

A)  is an example of first degree price discrimination. 
B)  is an example of second degree price discrimination. 
C)  is an example of third degree price discrimination. 
D)  All of the above. 
A)  is an example of first degree price discrimination. 
B)  is an example of second degree price discrimination. 
C)  is an example of third degree price discrimination. 
D)  All of the above.

Question 17

Group price discrimination results in social welfare that ________ under a single-price monopoly.

Accepted Answer

A)  is greater than 
B)  is lower than 
C)  is the same as 
D)  might be greater or might be lower than 
A)  is greater than 
B)  is lower than 
C)  is the same as 
D)  might be greater or might be lower than

Question 18

A perfect price discriminating equilibrium maximizes

Accepted Answer

A)  consumer surplus. 
B)  the associated deadweight loss. 
C)  the market inefficiency. 
D)  total welfare. 
A)  consumer surplus. 
B)  the associated deadweight loss. 
C)  the market inefficiency. 
D)  total welfare.

Question 19

A perfect price discriminating monopoly

Accepted Answer

A)  captures all consumer surplus. 
B)  creates deadweight loss. 
C)  increases market inefficiency. 
D)  decreases total welfare. 
A)  captures all consumer surplus. 
B)  creates deadweight loss. 
C)  increases market inefficiency. 
D)  decreases total welfare.

Question 20

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 is minimized; 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 is minimized; deadweight loss increases 
C)  consumers are better off; producers lose some sales due to high prices. 
D)  All of the above.

For a theme park two-tier pricing can include a positive admission price and a zero per-ride fee.

Firms are better off using rebates rather than just lowering the price of a good because

Explain using welfare measures whether consumers prefer a single price monopoly or a perfectly price discriminating monopoly.

Disneyland price discriminates because

Why doesn't a firm price discriminate based on income levels?

With peak-load pricing,a firm

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

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

While price discrimination is possible between two markets it is not possible in more than two.

If a firm faces a flat demand curve

Which of the following sellers is most able to perfectly price discriminate?

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

Price discrimination reveals

Purchasing a season pass to the local symphony

Group price discrimination results in social welfare that ________ under a single-price monopoly.

A perfect price discriminating equilibrium maximizes

A perfect price discriminating monopoly

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 .

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

For a theme park two-tier pricing can include a positive admission price and a zero per-ride fee.

Firms are better off using rebates rather than just lowering the price of a good because

Explain using welfare measures whether consumers prefer a single price monopoly or a perfectly price discriminating monopoly.

Disneyland price discriminates because

Why doesn't a firm price discriminate based on income levels?

With peak-load pricing,a firm

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

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

While price discrimination is possible between two markets it is not possible in more than two.

If a firm faces a flat demand curve

Which of the following sellers is most able to perfectly price discriminate?

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

Price discrimination reveals

Purchasing a season pass to the local symphony

Group price discrimination results in social welfare that ________ under a single-price monopoly.

A perfect price discriminating equilibrium maximizes

A perfect price discriminating monopoly

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 ________.

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 .