Question 1

Peak-load pricing is typically introduced when:

Accepted Answer

A) there are several competing firms. 
B) resale of the product is relatively easy. 
C) production costs vary in different time periods. 
D) consumer demands are highly stable. 
A) there are several competing firms. 
B) resale of the product is relatively easy. 
C) production costs vary in different time periods. 
D) consumer demands are highly stable.

Question 2

Use the following figure to answer the question : Figure 12-3 :  shows the indifference curves US1U1B11S1U1B0 and US1U1B12S1U1B0 of a consumer choosing between hours devoted at a tennis club and other goods.All consumers in this market have identical demand curves.IZ is the original budget line of a representative consumer,which shifts to AB when the club begins to charge an entry fee.
 
-In Figure 12-3,the consumer is indifferent between purchasing:

Accepted Answer

A) OF court hours and OE court hours. 
B) OZ court hours and OB court hours. 
C) zero court hours and OF court hours. 
D) zero court hours and OE court hours. 
A) OF court hours and OE court hours. 
B) OZ court hours and OB court hours. 
C) zero court hours and OF court hours. 
D) zero court hours and OE court hours.

Question 3

Which of the following is an advantage of peak-load pricing?

Accepted Answer

A) It allows a firm to reduce its total cost by reallocating its production. 
B) It allows a firm to capture the entire consumer surplus. 
C) It allows a firm to clearly identify each consumer's willingness to pay. 
D) It reduces monopoly profits and increases consumer surplus. 
A) It allows a firm to reduce its total cost by reallocating its production. 
B) It allows a firm to capture the entire consumer surplus. 
C) It allows a firm to clearly identify each consumer's willingness to pay. 
D) It reduces monopoly profits and increases consumer surplus.

Question 4

Which of the following is the closest example of block pricing?

Accepted Answer

A) An airline providing discounts to its frequent-flyers as they fly more 
B) At an auction of antique furniture,each piece of furniture is sold to the highest bidder 
C) A golf-club imposing a very high entry fee to reduce membership requests 
D) An electric utility charging higher rates to the customers in the summer season than in the winter season 
A) An airline providing discounts to its frequent-flyers as they fly more 
B) At an auction of antique furniture,each piece of furniture is sold to the highest bidder 
C) A golf-club imposing a very high entry fee to reduce membership requests 
D) An electric utility charging higher rates to the customers in the summer season than in the winter season

Question 5

Which of the following is true of intertemporal price discrimination?

Accepted Answer

A) In this form of price discrimination each consumer is charged his/her full willingness to pay. 
B) In this form of price discrimination groups are charged different prices according to the time of purchase. 
C) In this form of price discrimination monopolists capture the entire consumer surplus. 
D) In this form of price discrimination a consumer is charged a fixed fee in each time period. 
A) In this form of price discrimination each consumer is charged his/her full willingness to pay. 
B) In this form of price discrimination groups are charged different prices according to the time of purchase. 
C) In this form of price discrimination monopolists capture the entire consumer surplus. 
D) In this form of price discrimination a consumer is charged a fixed fee in each time period.

Question 6

A profit-maximizing monopoly firm that sells output in two distinct markets,A and B,will be in equilibrium when:

Accepted Answer

A) the price in each market is equal to its marginal cost of production. 
B) the marginal revenue in each market is equal to the price in that particular market. 
C) the marginal revenue in each market is equal to its marginal cost of production. 
D) the gap between price and marginal cost is maximized in each market. 
A) the price in each market is equal to its marginal cost of production. 
B) the marginal revenue in each market is equal to the price in that particular market. 
C) the marginal revenue in each market is equal to its marginal cost of production. 
D) the gap between price and marginal cost is maximized in each market.

Question 7

Which of the following is true of price discrimination?

Accepted Answer

A) It refers to the illegal movement of commodities from one country to another. 
B) It refers to the practice of charging different prices to different consumers for the same product. 
C) It is practiced by competitive firms to enjoy long run profits. 
D) It refers to the practice of buying a good at a low price and selling it at a higher price. 
A) It refers to the illegal movement of commodities from one country to another. 
B) It refers to the practice of charging different prices to different consumers for the same product. 
C) It is practiced by competitive firms to enjoy long run profits. 
D) It refers to the practice of buying a good at a low price and selling it at a higher price.

Question 8

Use the following figure to answer the question : Figure 12-1 : shows the downward sloping demand and marginal revenue [MR] curves of a monopolist. The MR curve intersects the marginal cost [MC] curve at point B. MC is constant at the PS1U1B11S1U1B0.
 
-Refer to Figure 12-1. If the monopolist perfectly price discriminates, profit will be equal to:

Accepted Answer

A) the area P3AP2. 
B) the area P3CP1. 
C) the area ABC. 
D) zero. 
A) the area P3AP2. 
B) the area P3CP1. 
C) the area ABC. 
D) zero.

Question 9

Which of the following is true of a price discriminating monopolist employing a two-part tariff on consumers having different demands?

Accepted Answer

A) They earn less profit than the non-price discriminating monopolists. 
B) They supply an output which is higher than the non-price discriminating monopoly output. 
C) They set a price that is higher than the non- price discriminating monopoly price. 
D) They set an entry fee which is more than the total consumer surplus. 
A) They earn less profit than the non-price discriminating monopolists. 
B) They supply an output which is higher than the non-price discriminating monopoly output. 
C) They set a price that is higher than the non- price discriminating monopoly price. 
D) They set an entry fee which is more than the total consumer surplus.

Question 10

Use the following figure to answer the question : Figure 12-1 : shows the downward sloping demand and marginal revenue [MR] curves of a monopolist. The MR curve intersects the marginal cost [MC] curve at point B. MC is constant at the PS1U1B11S1U1B0.
 
-Refer to Figure 12-1. If the monopolist cannot price discriminate, consumer surplus will be _____.

Accepted Answer

A) P3AP2 
B) P3CP1 
C) P2ABP1 
D) ABC 
A) P3AP2 
B) P3CP1 
C) P2ABP1 
D) ABC

Question 11

Suppose a restaurant has two types of customers,group A and group B.Group A customers have a price elasticity of demand equal to 6,while group B customers have a price elasticity of demand equal to 2.If the firm seeks to maximize profits by discriminating prices,and it charges group B customers $40 per meal,what price should it charge group A customers?

Accepted Answer

A) $20 
B) $22 
C) $24 
D) $26 
A) $20 
B) $22 
C) $24 
D) $26

Question 12

Suppose Amazon.com were to charge each consumer a different price,according to his or her willingness to pay for the latest novel in the Twilight series.The firm would be engaging in:

Accepted Answer

A) peak-load pricing. 
B) first-degree price discrimination. 
C) second-degree price discrimination. 
D) third-degree price discrimination. 
A) peak-load pricing. 
B) first-degree price discrimination. 
C) second-degree price discrimination. 
D) third-degree price discrimination.

Question 13

With peak-load pricing,a firm charges a different price in each period,because:

Accepted Answer

A) its supply is perfectly inelastic. 
B) its marginal cost of production varies in each period. 
C) the number of consumers change every period. 
D) the demand for the good is perfectly price elastic. 
A) its supply is perfectly inelastic. 
B) its marginal cost of production varies in each period. 
C) the number of consumers change every period. 
D) the demand for the good is perfectly price elastic.

Question 14

Use the following figure to answer the question : Figure 12-2 :  shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist.  
-Refer to Figure 12-2.Compared to the situation when there is no price discrimination,first-degree price discrimination causes the consumer surplus to decline by the area:

Accepted Answer

A) ZVN. 
B) CVF. 
C) VWE. 
D) EIF. 
A) ZVN. 
B) CVF. 
C) VWE. 
D) EIF.

Question 15

Within the context of price discrimination,explain why airlines charge higher fares to their customers during Christmas but offer significant discounts at other times of the year.

Accepted Answer

The demand for air travel varies at diff

Question 16

Intertemporal price discrimination is a form of:

Accepted Answer

A) first-degree price discrimination. 
B) block pricing. 
C) third-degree price discrimination. 
D) dumping. 
A) first-degree price discrimination. 
B) block pricing. 
C) third-degree price discrimination. 
D) dumping.

Question 17

A monopolist has segmented its customers into three groups,A,B,and C,and is discriminating prices between them.Each type A customer has a price elasticity of demand equal to 1.2;each type B customer has a price elasticity of demand equal to 6;and each type C customer has a price elasticity of demand equal to 11.If the firm charges type C customers $11 per unit,what prices should it charge its type A and type B customers in order to maximize profit?

Accepted Answer

A) Type A = $1.20 per unit and type B = $6.00 per unit 
B) Type A = $1.33 per unit and type B = $1.66 per unit 
C) Type A = $12.00 per unit and type B = $6.00 per unit 
D) Type A = $60.00 per unit and type B = $12.00 per unit 
A) Type A = $1.20 per unit and type B = $6.00 per unit 
B) Type A = $1.33 per unit and type B = $1.66 per unit 
C) Type A = $12.00 per unit and type B = $6.00 per unit 
D) Type A = $60.00 per unit and type B = $12.00 per unit

Question 18

First-degree price discrimination is _____.

Accepted Answer

A) perfect because it benefits consumers the most 
B) called first-degree because it does not apply to resale of products 
C) also known as perfect price discrimination 
D) the easiest form of price discrimination to implement 
A) perfect because it benefits consumers the most 
B) called first-degree because it does not apply to resale of products 
C) also known as perfect price discrimination 
D) the easiest form of price discrimination to implement

Question 19

Under peak-load pricing,the price in each period is set:

Accepted Answer

A) equal to the average cost of production in that period. 
B) above the marginal cost of production in that period. 
C) where the marginal cost intersects the demand for that period. 
D) where the average cost intersects the demand for that period. 
A) equal to the average cost of production in that period. 
B) above the marginal cost of production in that period. 
C) where the marginal cost intersects the demand for that period. 
D) where the average cost intersects the demand for that period.

Question 20

In case of third-degree price discrimination in two markets with differing demand elasticities,price will:

Accepted Answer

A) converge in the two markets if resale is possible. 
B) be higher in the market with the more elastic demand. 
C) be higher in the market with the higher average cost. 
D) differ between the two markets only if the number of consumers varies. 
A) converge in the two markets if resale is possible. 
B) be higher in the market with the more elastic demand. 
C) be higher in the market with the higher average cost. 
D) differ between the two markets only if the number of consumers varies.

Peak-load pricing is typically introduced when:

Which of the following is an advantage of peak-load pricing?

Which of the following is the closest example of block pricing?

Which of the following is true of intertemporal price discrimination?

A profit-maximizing monopoly firm that sells output in two distinct markets,A and B,will be in equilibrium when:

Which of the following is true of price discrimination?

Which of the following is true of a price discriminating monopolist employing a two-part tariff on consumers having different demands?

Suppose Amazon.com were to charge each consumer a different price,according to his or her willingness to pay for the latest novel in the Twilight series.The firm would be engaging in:

With peak-load pricing,a firm charges a different price in each period,because:

Within the context of price discrimination,explain why airlines charge higher fares to their customers during Christmas but offer significant discounts at other times of the year.

Intertemporal price discrimination is a form of:

First-degree price discrimination is _____.

Under peak-load pricing,the price in each period is set:

In case of third-degree price discrimination in two markets with differing demand elasticities,price will:

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

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Exam 12: Product Pricing With Monopoly Power

Peak-load pricing is typically introduced when:

Which of the following is an advantage of peak-load pricing?

Which of the following is the closest example of block pricing?

Which of the following is true of intertemporal price discrimination?

A profit-maximizing monopoly firm that sells output in two distinct markets,A and B,will be in equilibrium when:

Which of the following is true of price discrimination?

Which of the following is true of a price discriminating monopolist employing a two-part tariff on consumers having different demands?

Suppose Amazon.com were to charge each consumer a different price,according to his or her willingness to pay for the latest novel in the Twilight series.The firm would be engaging in:

With peak-load pricing,a firm charges a different price in each period,because:

Within the context of price discrimination,explain why airlines charge higher fares to their customers during Christmas but offer significant discounts at other times of the year.

Intertemporal price discrimination is a form of:

First-degree price discrimination is _____.

Under peak-load pricing,the price in each period is set:

In case of third-degree price discrimination in two markets with differing demand elasticities,price will:

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters