Exam 16: Pricing Strategy

In 2011,Netflix was charging $23.98 per month to rent three DVDs at a time as well as receive unlimited streaming.Although all subscribers under this plan pay the same rate,they do not receive the same quality of service.Subscribers who rent the fewest movies per month have the best chance of receiving the latest releases (for which there is usually a wait list)and will typically receive their DVDs faster.Is Netflix engaging in price discrimination,and if so,why?

Firms price discriminate

Consider the following pricing strategies: a.perfect price discrimination B)charging different prices to different groups of customers C)optimal two-part tariff D)single-price monopoly pricing Which of the pricing strategies leads to the economically efficient output level? A) a only B) a and b only C) a and c only D) a, b, and c only

For a firm that can effectively price discriminate,who will be charged a lower price?

Which of the following is a reason why airline yield management is an effective method to increase revenue?

Arbitrage

Calling long distance is often more expensive on weekdays between 8 am and 5 pm than in the evening hours.Why is this the case?

If a monopolist engages in first-degree price discrimination,it will produce the same output level as a perfectly competitive industry.

Figure 16-4 -Refer to Figure 16-4.Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the monopoly price.What is the profit earned under this pricing scheme?

Table 16-2 Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 16-2. The average cost of production is constant at $2 per tube. -Refer to Table 16-2.Which of the following statements is true about the two markets?

Lou buys an Iron Man 2 poster from Evan for $30 and resells it on eBay for $60.Which of the following statements is false?

Which of the following is a necessary condition for successful price discrimination?

A firm that can effectively price discriminate will charge a higher price to

Which of the following undermines a firm's ability to engage in price discrimination?

Which of the following products allows the seller to identify different groups of consumers (segment the market)at virtually no cost?

Yield management is the practice of

With an optimal two-part tariff,

With perfect price discrimination,the marginal revenue curve

Many book publishers use cost-plus pricing to establish prices for some of their books.Would you expect a publishing company to use a strict cost-plus pricing system for all its books? How might you determine if a publishing company actually does use cost-plus pricing for all its books?

Colleges offer merit awards to students who ordinarily would not qualify for financial help.Some have criticized this on grounds that merit awards disproportionately benefit students from wealthier communities with better school systems,siphoning resources away from lower-income students with greater financial need.A college's decision to grant merit awards is motivated by economic efficiency.