Question 1

Which of the following is not an example of price discrimination?

Accepted Answer

A) Adobe Systems offers software at discounted prices to students and faculty at K-12 and university levels. 
B) Unlike foreign tourists, citizens of Cambodia are exempted from paying an admission fee to the temples of Angkor. 
C) Senior citizens may purchase special fare tickets for public transportation that are not available to others. 
D) Buyers at an automotive parts store receive a discount for bulk buying because the store is able to pass on to its customers some of the lower average cost for producing large quantities. 
A) Adobe Systems offers software at discounted prices to students and faculty at K-12 and university levels. 
B) Unlike foreign tourists, citizens of Cambodia are exempted from paying an admission fee to the temples of Angkor. 
C) Senior citizens may purchase special fare tickets for public transportation that are not available to others. 
D) Buyers at an automotive parts store receive a discount for bulk buying because the store is able to pass on to its customers some of the lower average cost for producing large quantities.

Question 2

Which of the following products allows the seller to identify different groups of consumers (segment the market)and practice price discrimination?

Accepted Answer

A) Clothing items sold through Macy's Department Store 
B) A hamburger sold at Burger King 
C) A cafe latte sold at Starbucks 
D) Tickets to matinee shows at a movie theatre 
A) Clothing items sold through Macy's Department Store 
B) A hamburger sold at Burger King 
C) A cafe latte sold at Starbucks 
D) Tickets to matinee shows at a movie theatre

Question 3

Which of the following statements about perfect price discrimination is false?

Accepted Answer

A) There is no consumer surplus if a firm engages in perfect price discrimination. 
B) Perfect price discrimination occurs when the seller charges the highest price each consumer would be willing to pay for the product. 
C) A condition for perfect price discrimination is that it must be costlier to service some customers than others. 
D) For the price-discriminating firm, its marginal revenue curve coincides with its demand curve. 
A) There is no consumer surplus if a firm engages in perfect price discrimination. 
B) Perfect price discrimination occurs when the seller charges the highest price each consumer would be willing to pay for the product. 
C) A condition for perfect price discrimination is that it must be costlier to service some customers than others. 
D) For the price-discriminating firm, its marginal revenue curve coincides with its demand curve.

Question 4

Explain why the monopolist has no supply curve?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

A supply curve shows the relationship be

Question 5

Network externalities

Accepted Answer

A) can only exist when there are economies of scale. 
B) prevent the dominance of a market by one firm. 
C) exist when the usefulness of a product increases with the number of consumers who use it. 
D) are created when celebrity endorsements of products lead to a surge in the demand for those products. 
A) can only exist when there are economies of scale. 
B) prevent the dominance of a market by one firm. 
C) exist when the usefulness of a product increases with the number of consumers who use it. 
D) are created when celebrity endorsements of products lead to a surge in the demand for those products.

Question 6

Whenever a firm can charge a price greater than marginal cost

Accepted Answer

A) the firm must be a monopolist. 
B) there is some loss of economic efficiency. 
C) consumers have the ability to choose a close substitute. 
D) the firm will earn economic profits. 
A) the firm must be a monopolist. 
B) there is some loss of economic efficiency. 
C) consumers have the ability to choose a close substitute. 
D) the firm will earn economic profits.

Question 7

Consumers who will pay high prices to be among the first to own certain new products are called

Accepted Answer

A) savvy consumers. 
B) naïve consumers. 
C) gullible. 
D) early adopters. 
A) savvy consumers. 
B) naïve consumers. 
C) gullible. 
D) early adopters.

Question 8

One reason why McDonald's charges a single price for its products is that it is difficult and costly for the company to determine each individual consumer's willingness to pay.

Accepted Answer

A) True 
 B)False

Question 9

A monopoly firm is the only seller of a good or service that

Accepted Answer

A) has a perfectly elastic demand. 
B) has no close complements. 
C) does not need to be advertised. 
D) does not have a close substitute. 
A) has a perfectly elastic demand. 
B) has no close complements. 
C) does not need to be advertised. 
D) does not have a close substitute.

Question 10

What is a public franchise? Are all public franchises natural monopolies?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

A public franchise is a firm which the g

Question 11

Figure 9.2   Figure 9.2 above shows the demand and cost curves facing a monopolist.
-Refer to Figure 9.2.What is the firm's profit-maximising price?

Accepted Answer

A) P1. 
B) P2. 
C) P3. 
D) P4. 
A) P1. 
B) P2. 
C) P3. 
D) P4.

Question 12

Figure 9.15  
-Refer to Figure 9.15.The consumer surplus received under perfect price discrimination is

Accepted Answer

A) the area under the demand curve above P1 
B) the area under the demand curve above P3 
C) the area under the demand curve above P4 
D) zero 
A) the area under the demand curve above P1 
B) the area under the demand curve above P3 
C) the area under the demand curve above P4 
D) zero

Question 13

Which of the following pricing strategies allows a firm to earn economic profit?

Accepted Answer

A) Price discrimination 
B) Charging a price equal to marginal cost 
C) Charging a price equal to the average total cost of production 
D) Charging a price equal to the average variable cost of production 
A) Price discrimination 
B) Charging a price equal to marginal cost 
C) Charging a price equal to the average total cost of production 
D) Charging a price equal to the average variable cost of production

Question 14

If a firm knew every consumer's willingness to pay and could prevent arbitrage, it could charge every consumer a different price.This practice is known as

Accepted Answer

A) first-degree exploitation, or perfect price discrimination. 
B) maximisation of producer surplus, or perfect price discrimination. 
C) first-degree price discrimination, or perfect price discrimination. 
D) first-degree transfer of consumer surplus, or perfect price discrimination. 
A) first-degree exploitation, or perfect price discrimination. 
B) maximisation of producer surplus, or perfect price discrimination. 
C) first-degree price discrimination, or perfect price discrimination. 
D) first-degree transfer of consumer surplus, or perfect price discrimination.

Question 15

To whom does a price-discriminating firm charge the highest price?

Accepted Answer

A) The group with the largest demand. 
B) The group with the most elastic demand. 
C) The group with the least elastic demand. 
D) The group with demand that is unit-elastic. 
A) The group with the largest demand. 
B) The group with the most elastic demand. 
C) The group with the least elastic demand. 
D) The group with demand that is unit-elastic.

Question 16

To successfully price discriminate, a firm must ensure that there are no opportunities for arbitrage.

Accepted Answer

A) True 
 B)False

Question 17

If a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations, then it is engaging in

Accepted Answer

A) odd pricing. 
B) cost-plus pricing. 
C) price discrimination. 
D) markup pricing. 
A) odd pricing. 
B) cost-plus pricing. 
C) price discrimination. 
D) markup pricing.

Question 18

A monopoly firm's demand curve

Accepted Answer

A) is the same as the market demand curve. 
B) is perfectly inelastic. 
C) is more inelastic than the demand curve for the product. 
D) is inelastic at high prices and elastic at lower prices. 
A) is the same as the market demand curve. 
B) is perfectly inelastic. 
C) is more inelastic than the demand curve for the product. 
D) is inelastic at high prices and elastic at lower prices.

Question 19

Suppose a restaurant is trying to determine how much to charge for a bowl of chilli, and decides to run an experiment to see how much its customers are willing to pay by allowing them to set their own price for this menu item.
a.Is charging a customer the price he or she is willing to pay for the bowl of chilli an example of price discrimination? Briefly explain.
b.What is it called when a firm knows every consumer's willingness to pay, and can charge every consumer a different price? What happens to consumer surplus in this situation?
__________________________________________________________________________________________________________________________________________________________________________________________

Accepted Answer

a.This is an example of price discrimina

Question 20

Some economists argue that Microsoft became a monopoly in the market for computer software by developing MS-DOS, an operating system used for the first IBM personal computers.The more people who used MS-DOS-based programs, the greater the usefulness of a using a computer with an MS-DOS operating system.The explanation for Microsoft's monopoly is

Accepted Answer

A) the development of new technology that other firms could not copy. 
B) control of a key resource which, in this case, is the MS-DOS operating system. 
C) network externalities. 
D) patents Microsoft obtained when it developed the MS-DOS operating system. 
A) the development of new technology that other firms could not copy. 
B) control of a key resource which, in this case, is the MS-DOS operating system. 
C) network externalities. 
D) patents Microsoft obtained when it developed the MS-DOS operating system.

Which of the following is not an example of price discrimination?

Which of the following products allows the seller to identify different groups of consumers (segment the market)and practice price discrimination?

Which of the following statements about perfect price discrimination is false?

Explain why the monopolist has no supply curve? __________________________________________________________________________________________________________________________________________________________________________________________

Network externalities

Whenever a firm can charge a price greater than marginal cost

Consumers who will pay high prices to be among the first to own certain new products are called

One reason why McDonald's charges a single price for its products is that it is difficult and costly for the company to determine each individual consumer's willingness to pay.

A monopoly firm is the only seller of a good or service that

What is a public franchise? Are all public franchises natural monopolies? __________________________________________________________________________________________________________________________________________________________________________________________

Figure 9.2 Figure 9.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.2.What is the firm's profit-maximising price?

Figure 9.15 -Refer to Figure 9.15.The consumer surplus received under perfect price discrimination is

Which of the following pricing strategies allows a firm to earn economic profit?

If a firm knew every consumer's willingness to pay and could prevent arbitrage, it could charge every consumer a different price.This practice is known as

To whom does a price-discriminating firm charge the highest price?

To successfully price discriminate, a firm must ensure that there are no opportunities for arbitrage.

If a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations, then it is engaging in

A monopoly firm's demand curve

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters

Exam 9: Monopoly Markets

Which of the following is not an example of price discrimination?

Which of the following products allows the seller to identify different groups of consumers (segment the market)and practice price discrimination?

Which of the following statements about perfect price discrimination is false?

Explain why the monopolist has no supply curve? __________________________________________________________________________________________________________________________________________________________________________________________

Network externalities

Whenever a firm can charge a price greater than marginal cost

Consumers who will pay high prices to be among the first to own certain new products are called

One reason why McDonald's charges a single price for its products is that it is difficult and costly for the company to determine each individual consumer's willingness to pay.

A monopoly firm is the only seller of a good or service that

What is a public franchise? Are all public franchises natural monopolies? __________________________________________________________________________________________________________________________________________________________________________________________

Figure 9.2 Figure 9.2 above shows the demand and cost curves facing a monopolist. -Refer to Figure 9.2.What is the firm's profit-maximising price?

Figure 9.15 -Refer to Figure 9.15.The consumer surplus received under perfect price discrimination is

Which of the following pricing strategies allows a firm to earn economic profit?

If a firm knew every consumer's willingness to pay and could prevent arbitrage, it could charge every consumer a different price.This practice is known as

To whom does a price-discriminating firm charge the highest price?

To successfully price discriminate, a firm must ensure that there are no opportunities for arbitrage.

If a firm charges different consumers different prices for the same product and the difference cannot be attributed to cost variations, then it is engaging in

A monopoly firm's demand curve

Economics: Foundations and Models

Choices and Trade-Offs in the Market

Where Prices Come From: The Interaction of Demand and Supply

Elasticity: The Responsiveness of Demand and Supply

Economic Efficiency, Government Price Setting and Taxes

Consumer Choice and Behavioural Economics

Technology Production and Costs

Firms in Perfectly Competitive Markets

Monopolistic Competition: The Competitive Model in a More Realistic

Oligopoly: Markets With Few Competitors

The Markets for Labour and Other Factors of Production

Comparative Advantage and the Gains From International Trade

Government Intervention in the Market

Externalities, Environmental Policy and Public Goods

The Distribution of Income and Social Policy

Filters