Question 1

With block pricing,firms differentiate price according to _____.

Accepted Answer

A) each consumer's ability to pay 
B) the average cost of producing the output 
C) the quantity of output purchased 
D) the marginal cost of producing a particular unit of output 
A) each consumer's ability to pay 
B) the average cost of producing the output 
C) the quantity of output purchased 
D) the marginal cost of producing a particular unit of output

Question 2

We would expect price discrimination to be most successful in the market for:

Accepted Answer

A) haircuts. 
B) DVD's. 
C) cars. 
D) jeans. 
A) haircuts. 
B) DVD's. 
C) cars. 
D) jeans.

Question 3

With block pricing,consumers typically pay a price that:

Accepted Answer

A) reduces for additional quantities of output being purchased. 
B) remains the same regardless of the quantity purchased. 
C) is equal to the average cost of producing the output. 
D) increases for additional quantities of output being purchased. 
A) reduces for additional quantities of output being purchased. 
B) remains the same regardless of the quantity purchased. 
C) is equal to the average cost of producing the output. 
D) increases for additional quantities of output being purchased.

Question 4

Which of the following best describes a two-part tariff?

Accepted Answer

A) A discount provided to frequent shoppers 
B) A price that varies with the quantity of output consumed 
C) A price that varies with each individual consumer's ability to pay 
D) An entry fee followed by a constant per-unit price 
A) A discount provided to frequent shoppers 
B) A price that varies with the quantity of output consumed 
C) A price that varies with each individual consumer's ability to pay 
D) An entry fee followed by a constant per-unit price

Question 5

With a two-part tariff,consumers pay:

Accepted Answer

A) a constant "average" price per unit of output. 
B) higher prices for purchasing greater quantities of output. 
C) an "average" price per unit of output that declines with the quantity purchased. 
D) a flat fee followed by an increasing per unit price. 
A) a constant "average" price per unit of output. 
B) higher prices for purchasing greater quantities of output. 
C) an "average" price per unit of output that declines with the quantity purchased. 
D) a flat fee followed by an increasing per unit price.

Question 6

When a two-part tariff is employed on consumers with identical demand curves,the maximum entry fee the firm can charge:

Accepted Answer

A) is represented by the total area below the demand curve. 
B) is equal to the total consumer surplus. 
C) is equal to the total cost. 
D) is equal to the average total cost. 
A) is represented by the total area below the demand curve. 
B) is equal to the total consumer surplus. 
C) is equal to the total cost. 
D) is equal to the average total cost.

Question 7

Park and Fly,a chain that operates off-terminal parking lots near major airports in several U.S.cities,has a "frequent-parker" program that offers customers a week's free parking after they have paid for 35 days.Which of the following types of price discrimination is the company practicing?

Accepted Answer

A) Perfect price discrimination 
B) Predatory pricing 
C) Third-degree price discrimination 
D) Block pricing 
A) Perfect price discrimination 
B) Predatory pricing 
C) Third-degree price discrimination 
D) Block pricing

Question 8

What is a two-part tariff? Make up a numerical example to support your definition.

Accepted Answer

A two-part tariff is a form of second-de

Question 9

Consider a profit-maximizing monopolist whose consumers have identical demand curves.Which of the following will be true if the firm employs a two-part tariff pricing strategy for these consumers?

Accepted Answer

A) The firm will produce less output compared to a firm that is not using this pricing strategy. 
B) The firm will capture the entire consumer surplus. 
C) The firm will charge a tariff that also maximizes revenues. 
D) The firm will charge consumers a different entry fee,but a constant per-unit price. 
A) The firm will produce less output compared to a firm that is not using this pricing strategy. 
B) The firm will capture the entire consumer surplus. 
C) The firm will charge a tariff that also maximizes revenues. 
D) The firm will charge consumers a different entry fee,but a constant per-unit price.

Question 10

Which of the following strategies will allow a monopolist to earn higher profits by employing a two-part tariff on consumers with different demands?

Accepted Answer

A) Setting price equal to the marginal cost 
B) Setting price above the marginal cost 
C) Setting an entry fee equal to the consumer surplus 
D) Setting an entry fee higher than the consumer surplus 
A) Setting price equal to the marginal cost 
B) Setting price above the marginal cost 
C) Setting an entry fee equal to the consumer surplus 
D) Setting an entry fee higher than the consumer surplus

Question 11

A firm charges a higher price for its product in the domestic market than it charges abroad.Which of the following pricing strategies is the firm using?

Accepted Answer

A) Targeting 
B) Block pricing 
C) Dumping 
D) Price skimming 
A) Targeting 
B) Block pricing 
C) Dumping 
D) Price skimming

Question 12

With perfect price discrimination,a monopolist:

Accepted Answer

A) must lower the price on all units to increase sales. 
B) will charge each consumer the maximum price they are willing to pay. 
C) does not have a definite profit-maximizing level of output. 
D) has a marginal revenue curve that lies below the demand curve. 
A) must lower the price on all units to increase sales. 
B) will charge each consumer the maximum price they are willing to pay. 
C) does not have a definite profit-maximizing level of output. 
D) has a marginal revenue curve that lies below the demand curve.

Question 13

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, deadweight loss will be equal to:

Accepted Answer

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

Question 14

A book publisher faces two different markets with different price elasticities of demand for its books.In market A the price elasticity of demand is 6 and in market B the elasticity is 1.5.If the marginal cost of producing a book is $10,how should the firm price its books in the two markets?

Accepted Answer

A) market A = $12 and market B = $30 
B) market A = $60 and market B = $15 
C) market A = $15 and market B = $60 
D) market A = $30 and market B = $12 
A) market A = $12 and market B = $30 
B) market A = $60 and market B = $15 
C) market A = $15 and market B = $60 
D) market A = $30 and market B = $12

Question 15

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,if the fee goes above _____,the consumer will purchase no court hours.

Accepted Answer

A) OZ 
B) IA 
C) EF 
D) OE 
A) OZ 
B) IA 
C) EF 
D) OE

Question 16

Consider a monopolist selling her output in two markets,A and B.The price elasticity of demand in market A is 1.5,while the same in market B is 2.5.Calculate the marginal revenue [MR] from each market,if the monopolist charges $300 for the product in both the markets.

Accepted Answer

A) MRA = 13.3;MRB = 24.8 
B) MRA = 6.11;MRB = 35.8 
C) MRA = 11.11;MRB = 64.8 
D) MRA = 15.3;MRB = 74.8 
A) MRA = 13.3;MRB = 24.8 
B) MRA = 6.11;MRB = 35.8 
C) MRA = 11.11;MRB = 64.8 
D) MRA = 15.3;MRB = 74.8

Question 17

Which of the following is an example of price discrimination?

Accepted Answer

A) Both Andy and Beth pay $7 for a ticket to the same movie,although the show timings are different. 
B) Ann purchases a coach ticket on an airline for $250 while Bill purchases a first class ticket on the same flight for $900. 
C) Aaron purchases a hardback copy of Harry Potter and the Deathly Hallows for $25 while Barbara waits and purchases a copy of the same book six months later for $8. 
D) Audrey buys a front-row seat at a concert with back-stage access for $1,200,while Ben pays $500 for seats further away from the stage. 
A) Both Andy and Beth pay $7 for a ticket to the same movie,although the show timings are different. 
B) Ann purchases a coach ticket on an airline for $250 while Bill purchases a first class ticket on the same flight for $900. 
C) Aaron purchases a hardback copy of Harry Potter and the Deathly Hallows for $25 while Barbara waits and purchases a copy of the same book six months later for $8. 
D) Audrey buys a front-row seat at a concert with back-stage access for $1,200,while Ben pays $500 for seats further away from the stage.

Question 18

Under first-degree price discrimination,the marginal revenue curve:

Accepted Answer

A) is a horizontal straight line. 
B) slopes upward. 
C) coincides with the monopoly firm's demand curve. 
D) is identical to the marginal revenue curve facing a non-price discriminating monopolist. 
A) is a horizontal straight line. 
B) slopes upward. 
C) coincides with the monopoly firm's demand curve. 
D) is identical to the marginal revenue curve facing a non-price discriminating monopolist.

Question 19

When a monopolist practices third-degree price discrimination,price will be:

Accepted Answer

A) the same in each market if resale is not possible. 
B) higher in the market with the less elastic demand. 
C) higher in the market with the higher average cost. 
D) higher in the market will less number of consumers. 
A) the same in each market if resale is not possible. 
B) higher in the market with the less elastic demand. 
C) higher in the market with the higher average cost. 
D) higher in the market will less number of consumers.

Question 20

Block pricing by electric utilities is an example of:

Accepted Answer

A) predatory pricing. 
B) second-degree price discrimination. 
C) third-degree price discrimination. 
D) perfect price discrimination. 
A) predatory pricing. 
B) second-degree price discrimination. 
C) third-degree price discrimination. 
D) perfect price discrimination.

With block pricing,firms differentiate price according to _____.

We would expect price discrimination to be most successful in the market for:

With block pricing,consumers typically pay a price that:

Which of the following best describes a two-part tariff?

With a two-part tariff,consumers pay:

When a two-part tariff is employed on consumers with identical demand curves,the maximum entry fee the firm can charge:

Park and Fly,a chain that operates off-terminal parking lots near major airports in several U.S.cities,has a "frequent-parker" program that offers customers a week's free parking after they have paid for 35 days.Which of the following types of price discrimination is the company practicing?

What is a two-part tariff? Make up a numerical example to support your definition.

Consider a profit-maximizing monopolist whose consumers have identical demand curves.Which of the following will be true if the firm employs a two-part tariff pricing strategy for these consumers?

Which of the following strategies will allow a monopolist to earn higher profits by employing a two-part tariff on consumers with different demands?

A firm charges a higher price for its product in the domestic market than it charges abroad.Which of the following pricing strategies is the firm using?

With perfect price discrimination,a monopolist:

A book publisher faces two different markets with different price elasticities of demand for its books.In market A the price elasticity of demand is 6 and in market B the elasticity is 1.5.If the marginal cost of producing a book is $10,how should the firm price its books in the two markets?

Consider a monopolist selling her output in two markets,A and B.The price elasticity of demand in market A is 1.5,while the same in market B is 2.5.Calculate the marginal revenue [MR] from each market,if the monopolist charges $300 for the product in both the markets.

Which of the following is an example of price discrimination?

Under first-degree price discrimination,the marginal revenue curve:

When a monopolist practices third-degree price discrimination,price will be:

Block pricing by electric utilities is an example of:

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

Exam 12: Product Pricing With Monopoly Power

With block pricing,firms differentiate price according to _____.

We would expect price discrimination to be most successful in the market for:

With block pricing,consumers typically pay a price that:

Which of the following best describes a two-part tariff?

With a two-part tariff,consumers pay:

When a two-part tariff is employed on consumers with identical demand curves,the maximum entry fee the firm can charge:

Park and Fly,a chain that operates off-terminal parking lots near major airports in several U.S.cities,has a "frequent-parker" program that offers customers a week's free parking after they have paid for 35 days.Which of the following types of price discrimination is the company practicing?

What is a two-part tariff? Make up a numerical example to support your definition.

Consider a profit-maximizing monopolist whose consumers have identical demand curves.Which of the following will be true if the firm employs a two-part tariff pricing strategy for these consumers?

Which of the following strategies will allow a monopolist to earn higher profits by employing a two-part tariff on consumers with different demands?

A firm charges a higher price for its product in the domestic market than it charges abroad.Which of the following pricing strategies is the firm using?

With perfect price discrimination,a monopolist:

A book publisher faces two different markets with different price elasticities of demand for its books.In market A the price elasticity of demand is 6 and in market B the elasticity is 1.5.If the marginal cost of producing a book is $10,how should the firm price its books in the two markets?

Consider a monopolist selling her output in two markets,A and B.The price elasticity of demand in market A is 1.5,while the same in market B is 2.5.Calculate the marginal revenue [MR] from each market,if the monopolist charges $300 for the product in both the markets.

Which of the following is an example of price discrimination?

Under first-degree price discrimination,the marginal revenue curve:

When a monopolist practices third-degree price discrimination,price will be:

Block pricing by electric utilities is an example of:

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