Question 1

Recent research suggests that if Apple switched from uniform pricing of its iTunes to two-part pricing,

Accepted Answer

A)  total welfare would increase, but consumer surplus would decrease. 
B)  total welfare and consumer surplus would increase. 
C)  total welfare would decrease, but consumers surplus would increase. 
D)  total welfare and consumer surplus would decrease. 
A)  total welfare would increase, but consumer surplus would decrease. 
B)  total welfare and consumer surplus would increase. 
C)  total welfare would decrease, but consumers surplus would increase. 
D)  total welfare and consumer surplus would decrease.

Question 2

Cigarette companies favored a ban on cigarette advertising.

Accepted Answer

A) True 
 B)False

Question 3

At the monopolist's optimal amount of advertising,

Accepted Answer

A)  the marginal benefit of advertising exceeds the marginal cost of advertising. 
B)  the marginal benefit of advertising is equal to the marginal cost of advertising. 
C)  the marginal benefit of advertising is two times smaller than the marginal cost of advertising. 
D)  the marginal benefit of advertising is at least five times smaller than the marginal cost of advertising. 
A)  the marginal benefit of advertising exceeds the marginal cost of advertising. 
B)  the marginal benefit of advertising is equal to the marginal cost of advertising. 
C)  the marginal benefit of advertising is two times smaller than the marginal cost of advertising. 
D)  the marginal benefit of advertising is at least five times smaller than the marginal cost of advertising.

Question 4

Price discrimination is welfare reducing.

Accepted Answer

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

Question 5

A group price discriminator sells its product in Florida for three times the price it sets in New York.Assuming the firm faces the same constant marginal cost in each market and the price elasticity of demand in New York is -2.0,the demand in Florida

Accepted Answer

A)  has an elasticity of -6.0. 
B)  is more price elastic than the demand in New York. 
C)  has an elasticity of -1.2. 
D)  has an elasticity of -0.67. 
A)  has an elasticity of -6.0. 
B)  is more price elastic than the demand in New York. 
C)  has an elasticity of -1.2. 
D)  has an elasticity of -0.67.

Question 6

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

Accepted Answer

A)  Senior citizen discounts. 
B)  Buy two, get one free. 
C)  Buy one, get another half off. 
D)  None of the above. 
A)  Senior citizen discounts. 
B)  Buy two, get one free. 
C)  Buy one, get another half off. 
D)  None of the above.

Question 7

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 8

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 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

Advertising for Milk and Beef is usually done by

Accepted Answer

A)  interest groups that represent the whole industry. 
B)  a single firm in the market. 
C)  a small set of firms in a market. 
D)  It is not done because it doesn't pay to advertise homogeneous products. 
A)  interest groups that represent the whole industry. 
B)  a single firm in the market. 
C)  a small set of firms in a market. 
D)  It is not done because it doesn't pay to advertise homogeneous products.

Question 11

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

Accepted Answer

A) True 
 B)False

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

Question 13

Suppose a monopoly sells to two identifiably different types of customers,A and B,who are unable to practice arbitrage.The inverse demand curve for group A is PA = 10 - QA,and the inverse demand curve for group B is PB = 18 - QB.The monopolist is able to produce the good for either type of customer at a constant marginal cost of 2,and the monopolist has no fixed costs.If the monopolist practices group price discrimination,the profit-maximizing prices charged to each type of customer are

Accepted Answer

A)  PA = 6, and PB = 10. 
B)  PA = 4 and PB = 8. 
C)  PA = 10, and PB = 6. 
D)  PA = 8, and PB = 4. 
A)  PA = 6, and PB = 10. 
B)  PA = 4 and PB = 8. 
C)  PA = 10, and PB = 6. 
D)  PA = 8, and PB = 4.

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

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.

Recent research suggests that if Apple switched from uniform pricing of its iTunes to two-part pricing,

Cigarette companies favored a ban on cigarette advertising.

At the monopolist's optimal amount of advertising,

Price discrimination is welfare reducing.

A group price discriminator sells its product in Florida for three times the price it sets in New York.Assuming the firm faces the same constant marginal cost in each market and the price elasticity of demand in New York is -2.0,the demand in Florida

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

Two-part pricing offers a mechanism whereby the firm can

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

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

Advertising for Milk and Beef is usually done by

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

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

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

Purchasing a season pass to the local symphony

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

Recent research suggests that if Apple switched from uniform pricing of its iTunes to two-part pricing,

Cigarette companies favored a ban on cigarette advertising.

At the monopolist's optimal amount of advertising,

Price discrimination is welfare reducing.

A group price discriminator sells its product in Florida for three times the price it sets in New York.Assuming the firm faces the same constant marginal cost in each market and the price elasticity of demand in New York is -2.0,the demand in Florida

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

Two-part pricing offers a mechanism whereby the firm can

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

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

Advertising for Milk and Beef is usually done by

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

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

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

Purchasing a season pass to the local symphony

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