Exam 14: Price Discrimination and Pricing Strategy

A museum in Russia has two entrances: one for locals (written in Russian) and one for tourists (written in English). People who enter through the entrance written in Russian will end up paying 81.93 Rubles ($3.00). English-speaking tourists will use the entrance written in English, but they will end up paying 409.67 Rubles ($15.00). This practice is an example of:

Which of the following is NOT an easy way to split markets in order to practice price discrimination?

Which of the following statements is TRUE? I. People with common diseases live longer than people with rarer diseases. II. Developing drugs for common diseases is a lot less expensive than developing drugs for rare diseases. III. It is more profitable to make drugs for common diseases because the market is bigger than it is for rare diseases.

How did IBM price discriminate its laser printers?

In markets with different demand curves for the same good, different prices generate less profit than a single price.

Which of the following is an example of tying?

An important lesson of price discrimination is that:

Smuggling is an example of arbitrage.

Reference: Ref 14-3 (Figure: PPD) Refer to the figure. A firm that perfectly price discriminates will sell:

To succeed at price discrimination the monopolist must prevent arbitrage.

Tying is uncommon.

Arbitrage prevention is:

Which of the following is the main principle behind price discrimination?

A top-performing used-car salesman is able to sell his cars to each customer at their maximum willingness to pay, a practice known as:

Which of the following is NOT an example of price discrimination?

A perfectly price discriminating monopolist produces until:

Which of the following statements is TRUE? I. Perfect price discrimination maximizes consumer surplus. II. Perfect price discrimination maximizes gains from trade. III. Under perfect price discrimination, the monopolist produces until price equals marginal cost.

Suppose that Southwestern Airlines flight 171 will depart BWI for Detroit in 3 hours. The marginal cost and average cost of flying a customer are $35 and $68, respectively. Southwestern Airlines can increase its profits by selling a ticket for no less than:

In industries with high fixed costs, price discrimination:

Corresponding to the practice of price discrimination, Williams College offers different levels of financial aid to students based on students':