Question 1

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 2

-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.Bob is likely to price discriminate because

Accepted Answer

A) elasticities differ across markets. 
B) the installation of carpets cannot be resold. 
C) Bob can probably identify which consumers belong to which segment. 
D) All of the above. 
A) elasticities differ across markets. 
B) the installation of carpets cannot be resold. 
C) Bob can probably identify which consumers belong to which segment. 
D) All of the above.

Question 3

A perfect price discriminator receives a price equal to marginal revenue for each unit.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Consider a weapons producer that is selling guns to two countries that are at war with one another.Guns can be produced at a constant marginal cost of $10 per gun.The demand for guns in each of the countries is given by:
p = 50 - 0.5Q (Country
A)
p = 20 - 0.25Q (Country
B)
a.If the weapons producer can charge different prices to each country,what price and quantity will it sell to each?
b.If the weapons producer cannot price discriminate,what price and quantity of guns will it sell to each country?
c.Will the weapons manufacturer make more profit from price discriminating? Briefly explain.Why is it that the manufacturer will likely be able to price discriminate?
d.Which country will benefit from price discrimination? Which country will be worse off from price discrimination? Explain briefly.
e.Is the deadweight loss higher under price discrimination or a single-price? Show mathematically.

Accepted Answer

a.Q^A = 40,P^A = 30 Q^B = 20,P^B = 15 b.Write de

Question 6

Explain why a firm can earn more profit by price discrimination than from setting a uniform price.

Accepted Answer

First,price discrimination allows a firm

Question 7

Firms price discriminate to maximize total revenue.

Accepted Answer

A) True 
 B)False

Question 8

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 9

A perfect price discriminating equilibrium maximizes

Accepted Answer

A) consumer surplus. 
B) the associated deadweight loss. 
C) the market inefficiency. 
D) total welfare. 
A) consumer surplus. 
B) the associated deadweight loss. 
C) the market inefficiency. 
D) total welfare.

Question 10

A firm that practices multimarket price discrimination will set the lower price in the market that has the most elastic demand.

Accepted Answer

A) True 
 B)False

Question 11

-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 consumer surplus is

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 12

If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible,a firm with market power will

Accepted Answer

A) set a higher price in the market that is more price elastic. 
B) set a lower price in the market that is more price elastic. 
C) set price so as to equate the elasticity of demand across markets. 
D) set price equal to marginal cost in both markets. 
A) set a higher price in the market that is more price elastic. 
B) set a lower price in the market that is more price elastic. 
C) set price so as to equate the elasticity of demand across markets. 
D) set price equal to marginal cost in both markets.

Question 13

A perfect-price-discriminating monopoly's marginal revenue curve

Accepted Answer

A) lies below the demand curve. 
B) is the demand curve. 
C) varies for each consumer. 
D) is the same as the monopolist's marginal revenue curve. 
A) lies below the demand curve. 
B) is the demand curve. 
C) varies for each consumer. 
D) is the same as the monopolist's marginal revenue curve.

Question 14

A perfect price discriminator

Accepted Answer

A) charges each buyer her reservation price. 
B) charges different prices to each customer based upon different costs of delivery. 
C) generates a deadweight loss to society. 
D) charges lower prices to customers who buy greater quantities. 
A) charges each buyer her reservation price. 
B) charges different prices to each customer based upon different costs of delivery. 
C) generates a deadweight loss to society. 
D) charges lower prices to customers who buy greater quantities.

Question 15

-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 16

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

Accepted Answer

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

Question 17

Suppose a monopolist is considering starting a $500,000 advertising campaign.The current demand for its product is given by
p = 150 - 3Q
where Q is the quantity of output in thousands.If the monopolist undertakes the advertising campaign,it expects demand to increase to
p = 200 - 4Q
The (non-advertising)cost for the monopolist is C(Q)= 30Q.
a.Determine whether the monopolist should undertake the advertising campaign assuming that it is correctly anticipating the potential increase in demand.
b.What is the most the monopolist will invest towards this advertising campaign?

Accepted Answer

a.The monopolist's profits without adver

Question 18

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

Accepted Answer

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

Question 19

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

Accepted Answer

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

Question 20

When a firm uses a form of quantity discrimination it is the high quantity purchasers that generate most profit.

Accepted Answer

A) True 
 B)False

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

-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.Bob is likely to price discriminate because

A perfect price discriminator receives a price equal to marginal revenue for each unit.

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

Explain why a firm can earn more profit by price discrimination than from setting a uniform price.

Firms price discriminate to maximize total revenue.

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

A perfect price discriminating equilibrium maximizes

A firm that practices multimarket price discrimination will set the lower price in the market that has the most elastic demand.

-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 consumer surplus is

If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible,a firm with market power will

A perfect-price-discriminating monopoly's marginal revenue curve

A perfect price discriminator

-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?

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

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

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

When a firm uses a form of quantity discrimination it is the high quantity purchasers that generate most profit.

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

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

-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.Bob is likely to price discriminate because

A perfect price discriminator receives a price equal to marginal revenue for each unit.

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

Explain why a firm can earn more profit by price discrimination than from setting a uniform price.

Firms price discriminate to maximize total revenue.

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

A perfect price discriminating equilibrium maximizes

A firm that practices multimarket price discrimination will set the lower price in the market that has the most elastic demand.

-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 consumer surplus is

If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible,a firm with market power will

A perfect-price-discriminating monopoly's marginal revenue curve

A perfect price discriminator

-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?

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

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

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

When a firm uses a form of quantity discrimination it is the high quantity purchasers that generate most profit.

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