Question 1

Unlike perfect price discrimination,group price discrimination does not require

Accepted Answer

A)  firms to have market power. 
B)  the ability to distinguish between groups with different reservation prices. 
C)  the ability to limit or prevent resale. 
D)  None of the above. 
A)  firms to have market power. 
B)  the ability to distinguish between groups with different reservation prices. 
C)  the ability to limit or prevent resale. 
D)  None of the above.

Question 2

Price discrimination

Accepted Answer

A)  is illegal in the U.S. 
B)  is a form of pricing where consumers pay different prices for a good. 
C)  allows firms to set a single intermediate price between consumers' low and high willingness to pay. 
D)  is when consumers use prices to discriminate between different quality products. 
A)  is illegal in the U.S. 
B)  is a form of pricing where consumers pay different prices for a good. 
C)  allows firms to set a single intermediate price between consumers' low and high willingness to pay. 
D)  is when consumers use prices to discriminate between different quality products.

Question 3

Consumers who put a high value on a service

Accepted Answer

A)  are better off with perfect price discrimination. 
B)  are better off under a single-price monopoly. 
C)  are indifferent between perfect price discrimination and a single-price monopoly. 
D)  incur deadweight loss under either single-price monopoly or perfect price discrimination. 
A)  are better off with perfect price discrimination. 
B)  are better off under a single-price monopoly. 
C)  are indifferent between perfect price discrimination and a single-price monopoly. 
D)  incur deadweight loss under either single-price monopoly or perfect price discrimination.

Question 4

If people posing as a vacationer were able to purchase large numbers of airline tickets from the airlines and later resell them to business travelers

Accepted Answer

A)  group price discrimination on the part of airlines would no longer be profitable. 
B)  group price discrimination on the part of airlines would no longer be profit maximizing. 
C)  the airlines would respond by raising further the price charged to business flyers. 
D)  this person would not earn any economic profit. 
A)  group price discrimination on the part of airlines would no longer be profitable. 
B)  group price discrimination on the part of airlines would no longer be profit maximizing. 
C)  the airlines would respond by raising further the price charged to business flyers. 
D)  this person would not earn any economic profit.

Question 5

Resale is difficult when

Accepted Answer

A)  the good is light-weight. 
B)  the good is expensive. 
C)  transaction costs are high. 
D)  transaction costs are negligible. 
A)  the good is light-weight. 
B)  the good is expensive. 
C)  transaction costs are high. 
D)  transaction costs are negligible.

Question 6

Which of the following is an example of peak-load pricing?

Accepted Answer

A)  charging less for vacations to Hawaii during December and January 
B)  charging more for electricity on hot days 
C)  setting price equal to marginal cost when there is a capacity constraint 
D)  selling excess capacity at lower prices 
A)  charging less for vacations to Hawaii during December and January 
B)  charging more for electricity on hot days 
C)  setting price equal to marginal cost when there is a capacity constraint 
D)  selling excess capacity at lower prices

Question 7

If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible,a firm with market power will

Accepted Answer

A)  set a higher price in the market that is more price elastic. 
B)  set a lower price in the market that is more price elastic. 
C)  set price so as to equate the elasticity of demand across markets. 
D)  set price equal to marginal cost in both markets. 
A)  set a higher price in the market that is more price elastic. 
B)  set a lower price in the market that is more price elastic. 
C)  set price so as to equate the elasticity of demand across markets. 
D)  set price equal to marginal cost in both markets.

Question 8

If reservation prices are positively correlated,then

Accepted Answer

A)  pure bundling cannot increase a firm's profit. 
B)  pure bundling can increase a firm's profit. 
C)  it is unclear whether or not pure bundling can increase a firm's profit. 
D)  consumers lose leverage over firms. 
A)  pure bundling cannot increase a firm's profit. 
B)  pure bundling can increase a firm's profit. 
C)  it is unclear whether or not pure bundling can increase a firm's profit. 
D)  consumers lose leverage over firms.

Question 9

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

Accepted Answer

A)  The firm must be able to identify individual or groups of consumers with different demand curves. 
B)  The firm must be able to identify how its consumers' demand curves differ. 
C)  The good cannot be easily resold. 
D)  All of the above. 
A)  The firm must be able to identify individual or groups of consumers with different demand curves. 
B)  The firm must be able to identify how its consumers' demand curves differ. 
C)  The good cannot be easily resold. 
D)  All of the above.

Question 10

-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.

Question 11

What is one way firms can enforce tie-in sales?

Accepted Answer

A)  one of the goods has no close substitutes 
B)  contractual arrangements 
C)  information asymmetry 
D)  Any of the above. 
A)  one of the goods has no close substitutes 
B)  contractual arrangements 
C)  information asymmetry 
D)  Any of the above.

Question 12

Stores such as Costco and Sam's Club require an annual membership before you can shop there.This is a form of

Accepted Answer

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

Question 13

Which of the following helps a monopoly perfectly price discriminate?

Accepted Answer

A)  unit demand by each consumer 
B)  the product is perishable 
C)  the product is personalizable 
D)  All of the above. 
A)  unit demand by each consumer 
B)  the product is perishable 
C)  the product is personalizable 
D)  All of the above.

Question 14

Why do firms engage in price discrimination?

Accepted Answer

A)  to decrease cost 
B)  to increase profits 
C)  to increase consumer surplus 
D)  to prohibit the resale of their products 
A)  to decrease cost 
B)  to increase profits 
C)  to increase consumer surplus 
D)  to prohibit the resale of their products

Question 15

A firm engaging in group price discrimination

Accepted Answer

A)  divides customers into groups and then charges each customer within each group a different price, similar to perfect price discrimination. 
B)  divides customers into groups and then charges each group a different price. 
C)  bundles products into groups and sells the groups at different prices. 
D)  finds the average reservation price for a group of customers and sell its goods at that price. 
A)  divides customers into groups and then charges each customer within each group a different price, similar to perfect price discrimination. 
B)  divides customers into groups and then charges each group a different price. 
C)  bundles products into groups and sells the groups at different prices. 
D)  finds the average reservation price for a group of customers and sell its goods at that price.

Question 16

Each identical consumer has the following demand for golf,q = 100 - p,where q is the number of rounds of golf played per year and p is the price per round.The only golf course in an isolated town incurs a marginal cost of $10 per round of golf.It wishes to charge a membership fee and a fee per round of golf.What price will it set for each fee?

Accepted Answer

At a price of $10,consumer sur

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

When there is a capacity constraint

Accepted Answer

A)  firms face sunk costs when deciding whether or not to expand. 
B)  consumers will avoid the producer and go with a firm that has extra capacity. 
C)  firms are not maximizing their profits during high season. 
D)  firms can use peak-load pricing to increase profits during periods of high demand. 
A)  firms face sunk costs when deciding whether or not to expand. 
B)  consumers will avoid the producer and go with a firm that has extra capacity. 
C)  firms are not maximizing their profits during high season. 
D)  firms can use peak-load pricing to increase profits during periods of high demand.

Question 19

What is one reason consumers might demand a discount for quantity purchases?

Accepted Answer

A)  higher storage costs 
B)  lower marginal cost 
C)  lower marginal benefit 
D)  price gouging 
A)  higher storage costs 
B)  lower marginal cost 
C)  lower marginal benefit 
D)  price gouging

Question 20

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

Accepted Answer

A)  The firm must have market power. 
B)  The firm must be able to identify how its consumers' demand curves differ. 
C)  The must be able to limit or prevent resale. 
D)  All of the above. 
A)  The firm must have market power. 
B)  The firm must be able to identify how its consumers' demand curves differ. 
C)  The must be able to limit or prevent resale. 
D)  All of the above.

Unlike perfect price discrimination,group price discrimination does not require

Price discrimination

Consumers who put a high value on a service

If people posing as a vacationer were able to purchase large numbers of airline tickets from the airlines and later resell them to business travelers

Resale is difficult when

Which of the following is an example of peak-load pricing?

If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible,a firm with market power will

If reservation prices are positively correlated,then

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

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

What is one way firms can enforce tie-in sales?

Stores such as Costco and Sam's Club require an annual membership before you can shop there.This is a form of

Which of the following helps a monopoly perfectly price discriminate?

Why do firms engage in price discrimination?

A firm engaging in group price discrimination

Block pricing

When there is a capacity constraint

What is one reason consumers might demand a discount for quantity purchases?

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

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

Unlike perfect price discrimination,group price discrimination does not require

Price discrimination

Consumers who put a high value on a service

If people posing as a vacationer were able to purchase large numbers of airline tickets from the airlines and later resell them to business travelers

Resale is difficult when

Which of the following is an example of peak-load pricing?

If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible,a firm with market power will

If reservation prices are positively correlated,then

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

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

What is one way firms can enforce tie-in sales?

Stores such as Costco and Sam's Club require an annual membership before you can shop there.This is a form of

Which of the following helps a monopoly perfectly price discriminate?

Why do firms engage in price discrimination?

A firm engaging in group price discrimination

Block pricing

When there is a capacity constraint

What is one reason consumers might demand a discount for quantity purchases?

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

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