Question 1

Firms price discriminate to maximize total revenue.

Accepted Answer

A) True 
 B)False  False

Question 2

Nonlinear price discrimination is

Accepted Answer

A)  perfect price discrimination. 
B)  quantity price discrimination. 
C)  group price discrimination. 
D)  two-part pricing. 
A)  perfect price discrimination. 
B)  quantity price discrimination. 
C)  group price discrimination. 
D)  two-part pricing. B

Question 3

If you purchase one pound of apples the price is $1.50 per pound.If you buy a five pound bag of apples,the cost is $5.00.This is most likely an example of

Accepted Answer

A)  quantity discounts. 
B)  lower marginal cost. 
C)  lower marginal benefit. 
D)  price gouging. 
A)  quantity discounts. 
B)  lower marginal cost. 
C)  lower marginal benefit. 
D)  price gouging. A

Question 4

Assume a company can offer customers cable television and internet service at essentially zero marginal and average cost.The following table shows each customer's marginal willingness to pay for television,internet services,and for a bundle containing both.Which strategy yields the maximum profit,and what maximum profit is obtained?

Accepted Answer

A)  Sell separately and make a profit of $340. 
B)  Sell separately and make a profit of $280. 
C)  Bundle and make a profit of $320. 
D)  Bundle and make a profit of $360. 
A)  Sell separately and make a profit of $340. 
B)  Sell separately and make a profit of $280. 
C)  Bundle and make a profit of $320. 
D)  Bundle and make a profit of $360.

Question 5

At many municipal golf courses,local residents pay a lower fee to play than other golfers do.One necessary condition for the golf course to be able to successfully price discriminate according to residency is that

Accepted Answer

A)  they can check the identification cards of golfers. 
B)  local resident golfers and other golfers have the same price elasticity of demand to play at the municipal course. 
C)  there are many golf courses nearby from which golfers can choose. 
D)  they require all golfers to rent a cart. 
A)  they can check the identification cards of golfers. 
B)  local resident golfers and other golfers have the same price elasticity of demand to play at the municipal course. 
C)  there are many golf courses nearby from which golfers can choose. 
D)  they require all golfers to rent a cart.

Question 6

A firm's advertising can help rivals

Accepted Answer

A)  if it focuses on a general problem that the product addresses. 
B)  if it focuses on a secret ingredient that only this firm possesses. 
C)  if rivals do not advertise. 
D)  if rivals advertise. 
A)  if it focuses on a general problem that the product addresses. 
B)  if it focuses on a secret ingredient that only this firm possesses. 
C)  if rivals do not advertise. 
D)  if rivals advertise.

Question 7

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.

Question 8

Pizza joints often offer substantially lower prices for pizza picked up at the shop compared to delivered pizza prices.This may be an attempt at

Accepted Answer

A)  perfect price discrimination. 
B)  group price discrimination. 
C)  quantity discrimination. 
D)  second-degree price discrimination. 
A)  perfect price discrimination. 
B)  group price discrimination. 
C)  quantity discrimination. 
D)  second-degree price discrimination.

Question 9

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 10

If firms that practice second degree price discrimination use more block prices,

Accepted Answer

A)  both consumer surplus and welfare will decrease. 
B)  both consumer surplus and welfare will increase. 
C)  consumer surplus will decrease but welfare will increase. 
D)  consumer surplus will increase but welfare will decrease. 
A)  both consumer surplus and welfare will decrease. 
B)  both consumer surplus and welfare will increase. 
C)  consumer surplus will decrease but welfare will increase. 
D)  consumer surplus will increase but welfare will decrease.

Question 11

Suppose group price discrimination is possible; however,a firm sets the same price in each market.As a result,

Accepted Answer

A)  price elasticity of demand is the same in each market. 
B)  the price-inelastic market will buy zero units. 
C)  marginal revenue in the more price-elastic market exceeds marginal revenue in the less price-elastic market. 
D)  the deadweight loss is less than if the firm price discriminated. 
A)  price elasticity of demand is the same in each market. 
B)  the price-inelastic market will buy zero units. 
C)  marginal revenue in the more price-elastic market exceeds marginal revenue in the less price-elastic market. 
D)  the deadweight loss is less than if the firm price discriminated.

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

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

Accepted Answer

Consumers prefer a single pric

Question 14

Many theme parks charge an entrance fee and a per-ride fee equal to zero.This is an example of

Accepted Answer

A)  bundling. 
B)  two-part pricing. 
C)  group price discrimination. 
D)  perfect price discrimination. 
A)  bundling. 
B)  two-part pricing. 
C)  group price discrimination. 
D)  perfect price discrimination.

Question 15

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 16

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 17

Theatres charge lower prices for a matinee and usually don't accept coupons for the night showing of movies because

Accepted Answer

A)  consumers that attend the matinee have a higher price elasticity of demand. 
B)  consumers that attend the night show have a lower price elasticity of demand. 
C)  it increases profits compared to charging a single price. 
D)  All of the above. 
A)  consumers that attend the matinee have a higher price elasticity of demand. 
B)  consumers that attend the night show have a lower price elasticity of demand. 
C)  it increases profits compared to charging a single price. 
D)  All of the above.

Question 18

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 19

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

Accepted Answer

A) True 
 B)False

Question 20

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.

Firms price discriminate to maximize total revenue.

Nonlinear price discrimination is

If you purchase one pound of apples the price is $1.50 per pound.If you buy a five pound bag of apples,the cost is $5.00.This is most likely an example of

At many municipal golf courses,local residents pay a lower fee to play than other golfers do.One necessary condition for the golf course to be able to successfully price discriminate according to residency is that

A firm's advertising can help rivals

The monopoly can shift the demand for its product rightward by

Pizza joints often offer substantially lower prices for pizza picked up at the shop compared to delivered pizza prices.This may be an attempt at

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

If firms that practice second degree price discrimination use more block prices,

Suppose group price discrimination is possible; however,a firm sets the same price in each market.As a result,

If a firm faces a flat demand curve,

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

Many theme parks charge an entrance fee and a per-ride fee equal to zero.This is an example of

Price discrimination reveals

Theatres charge lower prices for a matinee and usually don't accept coupons for the night showing of movies because

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

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

Two-part pricing offers a mechanism whereby the firm can

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

Firms price discriminate to maximize total revenue.

Nonlinear price discrimination is

If you purchase one pound of apples the price is $1.50 per pound.If you buy a five pound bag of apples,the cost is $5.00.This is most likely an example of

At many municipal golf courses,local residents pay a lower fee to play than other golfers do.One necessary condition for the golf course to be able to successfully price discriminate according to residency is that

A firm's advertising can help rivals

The monopoly can shift the demand for its product rightward by

Pizza joints often offer substantially lower prices for pizza picked up at the shop compared to delivered pizza prices.This may be an attempt at

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

If firms that practice second degree price discrimination use more block prices,

Suppose group price discrimination is possible; however,a firm sets the same price in each market.As a result,

If a firm faces a flat demand curve,

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

Many theme parks charge an entrance fee and a per-ride fee equal to zero.This is an example of

Price discrimination reveals

Theatres charge lower prices for a matinee and usually don't accept coupons for the night showing of movies because

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

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

Two-part pricing offers a mechanism whereby the firm can

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