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

If somebody 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 3

Suppose a firm uses the following price strategy for every customer.The first two units purchased cost $4 each,and any extra unit costs $3.50.What kind of price discrimination is this?

Accepted Answer

A)  First-degree price discrimination 
B)  Group price discrimination. 
C)  Non-uniform pricing. 
D)  Uniform pricing. 
A)  First-degree price discrimination 
B)  Group price discrimination. 
C)  Non-uniform pricing. 
D)  Uniform pricing.

Question 4

The more block prices a monopoly can set instead of setting a single price,

Accepted Answer

A)  the smaller the deadweight loss. 
B)  the more producer surplus. 
C)  the larger the total welfare. 
D)  All of the above. 
A)  the smaller the deadweight loss. 
B)  the more producer surplus. 
C)  the larger the total welfare. 
D)  All of the above.

Question 5

A monopoly will NOT be able to perfectly price discriminate if

Accepted Answer

A)  obtaining information about each buyer's reservation price is too costly. 
B)  demand is very elastic. 
C)  demand is very inelastic. 
D)  resale is impossible. 
A)  obtaining information about each buyer's reservation price is too costly. 
B)  demand is very elastic. 
C)  demand is very inelastic. 
D)  resale is impossible.

Question 6

A specialized rice grower sells rice in two markets,the United States and Japan,and the marginal cost 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 multimarket price discrimination,which country's consumers will pay a higher price and by how much?

Accepted Answer

@#IMG-DLM& (1 + 1/-2)= @#IMG-DLM& (1 + 1/-1.5).Rea

Question 7

Historically,price discrimination was considered illegal in all instances.More recently,antitrust authorities have discovered that

Accepted Answer

A)  price discrimination can increase the coverage of a market thereby increasing welfare. 
B)  price discrimination limits the coverage of a market thereby increasing welfare. 
C)  price discrimination limits the coverage of a market thereby decreasing welfare. 
D)  price discrimination can increase the coverage of a market thereby decreasing welfare. 
A)  price discrimination can increase the coverage of a market thereby increasing welfare. 
B)  price discrimination limits the coverage of a market thereby increasing welfare. 
C)  price discrimination limits the coverage of a market thereby decreasing welfare. 
D)  price discrimination can increase the coverage of a market thereby decreasing welfare.

Question 8

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 9

The sales of shoes that include shoelaces is a tie-in sale that most likely

Accepted Answer

A)  greatly increases the shoe producer's profit. 
B)  increases transactions costs. 
C)  increases efficiency. 
D)  None of the above. 
A)  greatly increases the shoe producer's profit. 
B)  increases transactions costs. 
C)  increases efficiency. 
D)  None of the above.

Question 10

The effect on total market demand from the advertising of a specific brand will

Accepted Answer

A)  always be positive. 
B)  always be negative. 
C)  often be positive. 
D)  often be negative. 
A)  always be positive. 
B)  always be negative. 
C)  often be positive. 
D)  often be negative.

Question 11

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

Accepted Answer

The producer wants to set the lump sum t

Question 12

Suppose a profit-maximizing monopoly is able to employ multimarket price discrimination.The marginal cost of providing the good is constant and the same in both markets.The marginal revenue the firm earns on the last unit sold in the market with the lower price will be

Accepted Answer

A)  greater than the marginal revenue the firm earns on the last unit sold in the market with the higher price. 
B)  less than the marginal revenue the firm earns on the last unit sold in the market with the higher price. 
C)  equal to the marginal revenue the firm earns on the last unit sold in the market with the higher price. 
D)  greater than the marginal cost of the last unit. 
A)  greater than the marginal revenue the firm earns on the last unit sold in the market with the higher price. 
B)  less than the marginal revenue the firm earns on the last unit sold in the market with the higher price. 
C)  equal to the marginal revenue the firm earns on the last unit sold in the market with the higher price. 
D)  greater than the marginal cost of the last unit.

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

Accepted Answer

Setting MR = 1 in both markets

Question 14

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 15

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:
QA = 100 - 2p
QB = 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 16

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 17

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 18

The case where a firm sells each unit at the maximum amount each customer is willing to pay for it is called

Accepted Answer

A)  first-degree price discrimination. 
B)  second-degree price discrimination. 
C)  third-degree price discrimination. 
D)  nonlinear price discrimination. 
A)  first-degree price discrimination. 
B)  second-degree price discrimination. 
C)  third-degree price discrimination. 
D)  nonlinear price discrimination.

Question 19

Assume a firm organizes all individuals by their willingness to pay (least to most).If the firm starts to perfectly price discriminate,what is likely to happen?

Accepted Answer

A)  Consumers start to arbitrage amongst themselves. 
B)  The firm's profits will be maximized. 
C)  The firm's costs will be minimized. 
D)  The firm starts to arbitrage with consumers. 
A)  Consumers start to arbitrage amongst themselves. 
B)  The firm's profits will be maximized. 
C)  The firm's costs will be minimized. 
D)  The firm starts to arbitrage with consumers.

Question 20

The monopoly can shift the demand for its product rightward by

Accepted Answer

A)  accommodating entry. 
B)  advertising new uses for its product. 
C)  moving along the learning curve. 
D)  All of the above. 
A)  accommodating entry. 
B)  advertising new uses for its product. 
C)  moving along the learning curve. 
D)  All of the above.

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

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

Suppose a firm uses the following price strategy for every customer.The first two units purchased cost $4 each,and any extra unit costs $3.50.What kind of price discrimination is this?

The more block prices a monopoly can set instead of setting a single price,

A monopoly will NOT be able to perfectly price discriminate if

Historically,price discrimination was considered illegal in all instances.More recently,antitrust authorities have discovered that

Price discrimination reveals

The sales of shoes that include shoelaces is a tie-in sale that most likely

The effect on total market demand from the advertising of a specific brand will

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

Suppose a profit-maximizing monopoly is able to employ multimarket price discrimination.The marginal cost of providing the good is constant and the same in both markets.The marginal revenue the firm earns on the last unit sold in the market with the lower price will be

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?

A good example of perfect price discrimination is

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

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 case where a firm sells each unit at the maximum amount each customer is willing to pay for it is called

Assume a firm organizes all individuals by their willingness to pay (least to most).If the firm starts to perfectly price discriminate,what is likely to happen?

The monopoly can shift the demand for its product rightward by

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 12: Pricing and Advertising

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

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

Suppose a firm uses the following price strategy for every customer.The first two units purchased cost $4 each,and any extra unit costs $3.50.What kind of price discrimination is this?

The more block prices a monopoly can set instead of setting a single price,

A monopoly will NOT be able to perfectly price discriminate if

Historically,price discrimination was considered illegal in all instances.More recently,antitrust authorities have discovered that

Price discrimination reveals

The sales of shoes that include shoelaces is a tie-in sale that most likely

The effect on total market demand from the advertising of a specific brand will

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

Suppose a profit-maximizing monopoly is able to employ multimarket price discrimination.The marginal cost of providing the good is constant and the same in both markets.The marginal revenue the firm earns on the last unit sold in the market with the lower price will be

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?

A good example of perfect price discrimination is

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

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 case where a firm sells each unit at the maximum amount each customer is willing to pay for it is called

Assume a firm organizes all individuals by their willingness to pay (least to most).If the firm starts to perfectly price discriminate,what is likely to happen?

The monopoly can shift the demand for its product rightward by

Introduction

Supply and Demand

Applying the Supply-And-Demand Model

Consumer Choice

Applying Consumer Theory

Firms and Production

Costs

Competitive Firms and Markets

Applying the Competitive Model

General Equilibrium and Economic Welfare

Monopoly

Oligopoly and Monopolistic Competition

Game Theory

Factor Markets

Interest Rates, Investments, and Capital Markets

Uncertainty

Externalities, Open-Access, and Public Goods

Asymmetric Information

Contracts and Moral Hazards

Filters