Question 1

Which of the following is not cited as a reason for a firm to pursue a group pricing strategy?

Accepted Answer

A)  To minimize its total costs of production. 
B)  To increase its total profit. 
C)  To attract and lock in additional customers. 
D)  To create network externalities. 
A)  To minimize its total costs of production. 
B)  To increase its total profit. 
C)  To attract and lock in additional customers. 
D)  To create network externalities.

Question 2

At the profit-maximizing level of output, the amount by which the firm can mark up price is:

Accepted Answer

A)  inversely related to the price elasticity of demand for item in question. 
B)  directly related to the price elasticity of demand for item in question. 
C)  totally unrelated to the price elasticity of demand for item in question. 
D)  equal to the ratio of the marginal and average costs of production. 
A)  inversely related to the price elasticity of demand for item in question. 
B)  directly related to the price elasticity of demand for item in question. 
C)  totally unrelated to the price elasticity of demand for item in question. 
D)  equal to the ratio of the marginal and average costs of production.

Question 3

Because it is more extensive, first-degree price discrimination is more profitable for the firm than is third-degree price discrimination.

Accepted Answer

A) True 
 B)False

Question 4

The practice of charging different prices to various groups of customers that are not based on differences in the costs of production is referred to as:

Accepted Answer

A)  predatory pricing. 
B)  markup pricing. 
C)  discretionary pricing. 
D)  price discrimination. 
A)  predatory pricing. 
B)  markup pricing. 
C)  discretionary pricing. 
D)  price discrimination.

Question 5

Assuming the demand curve is downward sloping, as price increases, the price elasticity of demand for a good in absolute value) and marginal revenue:

Accepted Answer

A)  increase. 
B)  stay the same. 
C)  decrease. 
D)  cannot be determined. 
A)  increase. 
B)  stay the same. 
C)  decrease. 
D)  cannot be determined.

Question 6

Assume you have been hired to advise two different firms, A and B, regarding the price each firm should charge for its product, focusing on the amount each firm should mark up price over marginal cost. While both firms are price setters, the product produced by firm A is extremely unique and enjoys widespread appeal. In contrast, firm B sells a fairly standard product for which there are are several good, but not perfect, substitutes. How would your advice to each firm differ? How does the price elasticity of demand influence your recommendations?

Accepted Answer

The profit-maximizing price-setting firm

Question 7

"Personalized pricing" and "group pricing" are examples of:

Accepted Answer

A)  first-degree and second-degree price discrimination, respectively. 
B)  second-degree and third-degree price discrimination, respectively. 
C)  first-degree price discrimination. 
D)  first-degree and third-degree price discrimination, respectively. 
A)  first-degree and second-degree price discrimination, respectively. 
B)  second-degree and third-degree price discrimination, respectively. 
C)  first-degree price discrimination. 
D)  first-degree and third-degree price discrimination, respectively.

Which of the following is not cited as a reason for a firm to pursue a group pricing strategy?

At the profit-maximizing level of output, the amount by which the firm can mark up price is:

Because it is more extensive, first-degree price discrimination is more profitable for the firm than is third-degree price discrimination.

The practice of charging different prices to various groups of customers that are not based on differences in the costs of production is referred to as:

Assuming the demand curve is downward sloping, as price increases, the price elasticity of demand for a good in absolute value) and marginal revenue:

"Personalized pricing" and "group pricing" are examples of:

Managers and Economics

Demand, Supply, and Equilibrium Prices

Demand Elasticities

Techniques for Understanding Consumer Demand and Behavior

Production and Cost Analysis in the Short Run

Production and Cost Analysis in the Long Run

Market Structure: Perfect Competition

Market Structure: Monopoly and Monopolistic Competition

Market Structure: Oligopoly

Measuring Macroeconomic Activity

Spending by Individuals, Firms, and Governments on Real Goods and Services

The Role of Money in the Macro Economy

The Aggregate Model of the Macro Economy

International and Balance of Payments Issues in the Macro Economy

Combining Micro and Macro Analysis for Managerial Decision Making

Filters

Exam 10: Pricing Strategies for the Firm

Which of the following is not cited as a reason for a firm to pursue a group pricing strategy?

At the profit-maximizing level of output, the amount by which the firm can mark up price is:

Because it is more extensive, first-degree price discrimination is more profitable for the firm than is third-degree price discrimination.

The practice of charging different prices to various groups of customers that are not based on differences in the costs of production is referred to as:

Assuming the demand curve is downward sloping, as price increases, the price elasticity of demand for a good in absolute value) and marginal revenue:

"Personalized pricing" and "group pricing" are examples of:

Managers and Economics

Demand, Supply, and Equilibrium Prices

Demand Elasticities

Techniques for Understanding Consumer Demand and Behavior

Production and Cost Analysis in the Short Run

Production and Cost Analysis in the Long Run

Market Structure: Perfect Competition

Market Structure: Monopoly and Monopolistic Competition

Market Structure: Oligopoly

Measuring Macroeconomic Activity

Spending by Individuals, Firms, and Governments on Real Goods and Services

The Role of Money in the Macro Economy

The Aggregate Model of the Macro Economy

International and Balance of Payments Issues in the Macro Economy

Combining Micro and Macro Analysis for Managerial Decision Making

Filters