Question 1

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

Accepted Answer

A) A. 
B) A + B + C. 
C) A + B + C + D + E. 
D) zero. 
A) A. 
B) A + B + C. 
C) A + B + C + D + E. 
D) zero.

Question 2

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 3

If a firm sells to two distinct identifiable markets and resale is impossible,why is price discrimination more profitable than setting a single price?

Accepted Answer

If the firm charges a single price on th

Question 4

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

p_us(1 + 1/-2)= p_j(1 + 1/-1.5).Rea

Question 5

A perfect-price-discriminating monopoly maximizes social welfare as measured by the sum of producer surplus plus consumer surplus.

Accepted Answer

A) True 
 B)False

Question 6

-The above figure shows the market for a particular good.If the market is controlled by a perfect-price-discriminating monopoly,compared to a monopoly who charges a single price,the change in producer surplus is

Accepted Answer

A) B + D. 
B) A. 
C) A + C + E. 
D) B + C + D + E. 
A) B + D. 
B) A. 
C) A + C + E. 
D) B + C + D + E.

Question 7

-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 8

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

Accepted Answer

A) a BMW selling for more than a VW 
B) local residents receiving a discount at the local golf course 
C) the fact that a razor is cheap and blades are expensive 
D) a hotel charging more for a room if the customers bring pets 
A) a BMW selling for more than a VW 
B) local residents receiving a discount at the local golf course 
C) the fact that a razor is cheap and blades are expensive 
D) a hotel charging more for a room if the customers bring pets

Question 9

Suppose all individuals are identical,and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 - (1/2)q where p is price in $ per hour and q is hours per month.The firm faces a constant marginal cost of $1.If the firm will charge a monthly access fee plus a per hour rate,the monthly access fee will equal

Accepted Answer

A) $1. 
B) $5. 
C) $8. 
D) $16. 
A) $1. 
B) $5. 
C) $8. 
D) $16.

Question 10

Airlines offer lower prices to vacationers than to business travelers because

Accepted Answer

A) of government regulations requiring them to do so. 
B) business travelers do not care at all about costs. 
C) business travelers are less flexible in their travel plans than vacationers are. 
D) airlines know that business travelers enjoy flying more than vacationers do. 
A) of government regulations requiring them to do so. 
B) business travelers do not care at all about costs. 
C) business travelers are less flexible in their travel plans than vacationers are. 
D) airlines know that business travelers enjoy flying more than vacationers do.

Question 11

If both Ben and Catherine value good X more than good Y,a firm can increase profits by bundling the two products.

Accepted Answer

A) True 
 B)False

Question 12

An electric utility is going to use a block-pricing schedule.They plan to charge P1 for the first Q1 units and P2 for the subsequent units.The units sold at P2 are the total units sold,Q2,minus the total units sold at P1.The inverse demand curve is P = $100 - Q,and the marginal and average cost is $40.Use calculus to solve for P1,P2,Q1,Q2.

Accepted Answer

The profit equation for this utility is

Question 13

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 14

Suppose all individuals are identical,and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 - (1/2)q where p is price in $ per hour and q is hours per month.The firm faces a constant marginal cost of $1.Potential consumer surplus equals

Accepted Answer

A) $4. 
B) $8. 
C) $16. 
D) $32. 
A) $4. 
B) $8. 
C) $16. 
D) $32.

Question 15

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

Accepted Answer

A) There are no other firms in the market. 
B) The good is a nondurable. 
C) The good cannot be easily resold. 
D) All of the above. 
A) There are no other firms in the market. 
B) The good is a nondurable. 
C) The good cannot be easily resold. 
D) All of the above.

Question 16

Consider a monopolist which sells output in two markets,the home market and the foreign market.Initially the monopolist is unable to price discriminate and sets a single price for both markets.However,the demand in the foreign market is such that at the price the monopoly sets,no goods are sold in the foreign market.If the monopolist is then able to price discriminate,will the overall deadweight loss increase or decrease? Explain.

Accepted Answer

Since the monopolist is not pricing the

Question 17

Suppose there are two types of consumers with two different demand curves,and the marginal cost of the monopoly is $10.What could be the possible price under two-part pricing that will maximize the monopoly profit?

Accepted Answer

A) $8 
B) $9 
C) $10 
D) $12 
A) $8 
B) $9 
C) $10 
D) $12

Question 18

If a market is controlled by a perfect-price-discriminating monopoly,then

Accepted Answer

A) a deadweight loss is generated. 
B) there is no consumer surplus. 
C) consumer surplus is the same as under perfect competition. 
D) output is less than that of a single-price monopoly. 
A) a deadweight loss is generated. 
B) there is no consumer surplus. 
C) consumer surplus is the same as under perfect competition. 
D) output is less than that of a single-price monopoly.

Question 19

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 20

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

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

A monopoly will NOT be able to perfectly price discriminate if

If a firm sells to two distinct identifiable markets and resale is impossible,why is price discrimination more profitable than setting a single price?

A perfect-price-discriminating monopoly maximizes social welfare as measured by the sum of producer surplus plus consumer surplus.

-The above figure shows the market for a particular good.If the market is controlled by a perfect-price-discriminating monopoly,compared to a monopoly who charges a single price,the change in producer surplus is

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

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

Airlines offer lower prices to vacationers than to business travelers because

If both Ben and Catherine value good X more than good Y,a firm can increase profits by bundling the two products.

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

Suppose all individuals are identical,and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 - (1/2)q where p is price in $ per hour and q is hours per month.The firm faces a constant marginal cost of $1.Potential consumer surplus equals

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

Suppose there are two types of consumers with two different demand curves,and the marginal cost of the monopoly is $10.What could be the possible price under two-part pricing that will maximize the monopoly profit?

If a market is controlled by a perfect-price-discriminating monopoly,then

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

Why do firms engage in price discrimination?

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters

Exam 12: Pricing and Advertising

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

A monopoly will NOT be able to perfectly price discriminate if

If a firm sells to two distinct identifiable markets and resale is impossible,why is price discrimination more profitable than setting a single price?

A perfect-price-discriminating monopoly maximizes social welfare as measured by the sum of producer surplus plus consumer surplus.

-The above figure shows the market for a particular good.If the market is controlled by a perfect-price-discriminating monopoly,compared to a monopoly who charges a single price,the change in producer surplus is

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

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

Airlines offer lower prices to vacationers than to business travelers because

If both Ben and Catherine value good X more than good Y,a firm can increase profits by bundling the two products.

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

Suppose all individuals are identical,and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 - (1/2)q where p is price in $ per hour and q is hours per month.The firm faces a constant marginal cost of $1.Potential consumer surplus equals

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

Suppose there are two types of consumers with two different demand curves,and the marginal cost of the monopoly is $10.What could be the possible price under two-part pricing that will maximize the monopoly profit?

If a market is controlled by a perfect-price-discriminating monopoly,then

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

Why do firms engage in price discrimination?

Introduction

Supply and Demand

A Consumers Constrained Choice

Demand

Consumer Welfare and Policy Analysis

Firms and Production

Costs

Competitive Firms and Markets

Properties and Applications of the Competitive Model

General Equilibrium and Economic Welfare

Monopoly and Monopsony

Game Theory

Oligopoly and Monopolistic Competition

Factor Markets

Uncertainty

Property Rights, Externalities, Rivalry, and Exclusion

Asymmetric Information

Contracts and Moral Hazards

Filters