Question 1

A firm that is selling a product at or below cost on foreign markets in order to drive foreign producers out of business is engaging in

Accepted Answer

A)  international price discrimination. 
B)  persistent dumping. 
C)  predatory dumping. 
D)  sporadic dumping. 
A)  international price discrimination. 
B)  persistent dumping. 
C)  predatory dumping. 
D)  sporadic dumping.

Question 2

If the external market for an intermediate product is imperfectly competitive, then the transfer price should be set equal to

Accepted Answer

A)  the market price of the intermediate product. 
B)  the marginal cost of producing the optimal quantity of the intermediate product. 
C)  the market price of the final product. 
D)  None of the above is correct. 
A)  the market price of the intermediate product. 
B)  the marginal cost of producing the optimal quantity of the intermediate product. 
C)  the market price of the final product. 
D)  None of the above is correct.

Question 3

Carolina Berries manufactures many varieties of jams and jellies. An increase in the price of their strawberry jam can be expected to

Accepted Answer

A)  increase the demand for their strawberry jelly because the two are complements. 
B)  increase the demand for their strawberry jelly because the two are substitutes. 
C)  decrease the demand for their strawberry jelly because the two are complements. 
D)  decrease the demand for their strawberry jelly because the two are substitutes. 
A)  increase the demand for their strawberry jelly because the two are complements. 
B)  increase the demand for their strawberry jelly because the two are substitutes. 
C)  decrease the demand for their strawberry jelly because the two are complements. 
D)  decrease the demand for their strawberry jelly because the two are substitutes.

Question 4

Charging of lower price abroad than at home for the same commodity because of greater elasticity of demand in the foreign market is known as

Accepted Answer

A)  price discrimination. 
B)  dumping. 
C)  transfer pricing. 
D)  transfer discrimination. 
A)  price discrimination. 
B)  dumping. 
C)  transfer pricing. 
D)  transfer discrimination.

Question 5

A firm that is engaging in price discrimination will

Accepted Answer

A)  charge a higher price to consumers with a higher price elasticity of demand. 
B)  charge a higher price to consumers with a lower price elasticity of demand. 
C)  earn lower profits than a similar firm that does not engage in price discrimination. 
D)  generally be a perfectly competitive firm. 
A)  charge a higher price to consumers with a higher price elasticity of demand. 
B)  charge a higher price to consumers with a lower price elasticity of demand. 
C)  earn lower profits than a similar firm that does not engage in price discrimination. 
D)  generally be a perfectly competitive firm.

Question 6

A firm manufactures a product that is sold on two different markets (A and B) that have the following demand functions:QA = 200 - 2PAQB = 240 - 2PBThe firm has the following marginal cost function:MC = 20 + 2QIf the firm is engaging in price discrimination, how many units should be sold in each market to maximize profits? What prices should the firm charge in each market?

Accepted Answer

Question 7

A European firm produces cars at a marginal cost of $25,000 and sells the product in two markets (the US and EU). The demand in the US is while the demand in the EU is . What price should the firm charge in the US?

Accepted Answer

A)  35,000 
B)  37,500 
C)  42,500 
D)  45,000 
A)  35,000 
B)  37,500 
C)  42,500 
D)  45,000

Question 8

If a firm that does not price discriminate begins to practice first-degree price discrimination, its profit will increase by an amount equal to consumers' surplus.

Accepted Answer

A) True 
 B)False

Question 9

Firms that use cost-plus pricing should

Accepted Answer

A)  use a higher markup on products with a relatively inelastic demand. 
B)  use a higher markup on products with a relatively elastic demand. 
C)  base their calculations on the historical average cost of the product. 
D)  apply the same markup on every product that they sell. 
A)  use a higher markup on products with a relatively inelastic demand. 
B)  use a higher markup on products with a relatively elastic demand. 
C)  base their calculations on the historical average cost of the product. 
D)  apply the same markup on every product that they sell.

Question 10

Ice-cream company is selling its product to individual consumers and restaurants. The demand functions of the two types of customers and the total cost function of the ice-cream company are given below.
 $$\text { Comsumers: } Q _ { 1 } = 100 - 5 P _ { 1 }$$ $$\text { Restaurants: } Q _ { 2 } = 100 - 10 P _ { 2 }$$ What is the optimal level of output and how should the firm distribute its sales?
 $$T C = 50 + 5 Q$$

Accepted Answer

The answer of Ice-cream company is selling its product to...

Question 11

Developing a product to sell at a predetermined price is called

Accepted Answer

A)  value pricing. 
B)  skimming. 
C)  price lining. 
D)  prestige pricing. 
A)  value pricing. 
B)  skimming. 
C)  price lining. 
D)  prestige pricing.

Question 12

Charging of higher price for a good or a service during the times with the highest demand is know as

Accepted Answer

A)  peak-load pricing. 
B)  cost-plus pricing. 
C)  transfer pricing. 
D)  predatory pricing. 
A)  peak-load pricing. 
B)  cost-plus pricing. 
C)  transfer pricing. 
D)  predatory pricing.

Question 13

An imperfectly competitive firm produces two products (A and B) with interrelated demand functions. If the firm increases the number of units of A sold from 150 to 151, total revenue from the sale of A will increase from $1,500 to $1,505. Taking into account the interdependence between A and B, the marginal revenue from the sale of one additional unit of A must be

Accepted Answer

A)  $5. 
B)  greater than $5. 
C)  less than $5. 
D)  This question cannot be answered without additional information. 
A)  $5. 
B)  greater than $5. 
C)  less than $5. 
D)  This question cannot be answered without additional information.

Question 14

Skimming refers to the practice of developing a product to be sold for a specific target price.

Accepted Answer

A) True 
 B)False

Question 15

Which of the price discrimination degrees are least practical or likely to be practiced?

Accepted Answer

A)  First-degree price discrimination 
B)  Second-degree price discrimination 
C)  Third-degree price discrimination 
D)  Fourth-degree price discrimination 
A)  First-degree price discrimination 
B)  Second-degree price discrimination 
C)  Third-degree price discrimination 
D)  Fourth-degree price discrimination

Question 16

A firm that produces bread and tortillas has estimated the quantities of bread and tortillas that it can produce with two levels of total expenditures as shown in the table below.
 $$\begin{array} { | l | l | l | l | } 
\hline  { \text { Total Cost } = 80 } & & { \text { Total cost } = 100 } \
\hline \text { Bread } & \text { Tortillas } & \text { Bread } & \text { Tortillas } \
\hline 50 & 0 & 60 & 0 \
\hline 45 & 35 & 55 & 40 \
\hline 35 & 60 & 40 & 75 \
\hline 20 & 80 & 26 & 100 \
\hline 0 & 90 & 0 & 120 \
\hline
\end{array}$$ If it sells each of these products for $1 per unit, what is the optimal combination of bread and tortillas the firm should produce and what is the maximum profit it can achieve?

Accepted Answer

The answer of A firm that produces bread and tortillas...

Question 17

A movie theater that charges a lower price for matinees than for evening showings is engaging in

Accepted Answer

A)  first-degree price discrimination. 
B)  second-degree price discrimination. 
C)  third-degree price discrimination. 
D)  The answer cannot be determined without additional information. 
A)  first-degree price discrimination. 
B)  second-degree price discrimination. 
C)  third-degree price discrimination. 
D)  The answer cannot be determined without additional information.

Question 18

A firm produces two products (A and B) jointly. Every time a unit of A is produced, a unit of B is also produced as a byproduct. At the current level of output, the marginal revenue from sales of A is $25 and from sales of B is $12. The marginal cost of producing a unit of A is $37, so the firm should

Accepted Answer

A)  continue producing the current level of output. 
B)  increase its rate of production. 
C)  reduce its rate of production. 
D)  This question cannot be answered without additional information. 
A)  continue producing the current level of output. 
B)  increase its rate of production. 
C)  reduce its rate of production. 
D)  This question cannot be answered without additional information.

Question 19

A firm manufactures a product that is sold on two different markets (A and B) that have the following demand functions: $$\begin{array}{l}
Q _ { A } = 100 - 0.50 P _ { A }\
Q _ { B } = 60 - 0.50 P _ { B }
\end{array}$$ The firm has the following marginal cost function: $$M C = 20 + 0.80 Q$$ If the firm is engaging in price discrimination, what prices should be charged on each market and how many units should be sold on each market?

Accepted Answer

The answer of A firm manufactures a product that is...

Question 20

A firm produces a product at a fixed marginal cost of $2 and sells the product on two different markets (A and B) . The demand on market A is QA = 10 - P. The demand on market B is QB = 20 - P. What quantity should the firm sell on market B?

Accepted Answer

A)  4 
B)  6 
C)  9 
D)  None of the above is correct. 
A)  4 
B)  6 
C)  9 
D)  None of the above is correct.

A firm that is selling a product at or below cost on foreign markets in order to drive foreign producers out of business is engaging in

If the external market for an intermediate product is imperfectly competitive, then the transfer price should be set equal to

Carolina Berries manufactures many varieties of jams and jellies. An increase in the price of their strawberry jam can be expected to

Charging of lower price abroad than at home for the same commodity because of greater elasticity of demand in the foreign market is known as

A firm that is engaging in price discrimination will

A European firm produces cars at a marginal cost of $25,000 and sells the product in two markets (the US and EU). The demand in the US is while the demand in the EU is . What price should the firm charge in the US?

If a firm that does not price discriminate begins to practice first-degree price discrimination, its profit will increase by an amount equal to consumers' surplus.

Firms that use cost-plus pricing should

Developing a product to sell at a predetermined price is called

Charging of higher price for a good or a service during the times with the highest demand is know as

Skimming refers to the practice of developing a product to be sold for a specific target price.

Which of the price discrimination degrees are least practical or likely to be practiced?

A movie theater that charges a lower price for matinees than for evening showings is engaging in

A firm produces a product at a fixed marginal cost of $2 and sells the product on two different markets (A and B) . The demand on market A is Q_A = 10 - P. The demand on market B is Q_B = 20 - P. What quantity should the firm sell on market B?

The Nature and Scope of Managerial Economics

Demand, Supply, and Equilibrium Analysis

Optimization Techniques and New Management Tools

Demand Theory

Demand Estimation

Demand Forecasting

Production Theory and Estimation

Cost Theory and Estimation

Market Structure: Perfect Competition, Monopoly, and Monopolistic Competition

Oligopoly and Firm Architecture

Game Theory and Strategic Behavior

Regulation and Antitrust: The Role of Government in the Economy

Risk Analysis

Long-Run Investment Decisions: Capital Budgeting

Filters

Exam 12: Pricing Practices

A firm that is selling a product at or below cost on foreign markets in order to drive foreign producers out of business is engaging in

If the external market for an intermediate product is imperfectly competitive, then the transfer price should be set equal to

Carolina Berries manufactures many varieties of jams and jellies. An increase in the price of their strawberry jam can be expected to

Charging of lower price abroad than at home for the same commodity because of greater elasticity of demand in the foreign market is known as

A firm that is engaging in price discrimination will

A European firm produces cars at a marginal cost of $25,000 and sells the product in two markets (the US and EU). The demand in the US is while the demand in the EU is . What price should the firm charge in the US?

If a firm that does not price discriminate begins to practice first-degree price discrimination, its profit will increase by an amount equal to consumers' surplus.

Firms that use cost-plus pricing should

Developing a product to sell at a predetermined price is called

Charging of higher price for a good or a service during the times with the highest demand is know as

Skimming refers to the practice of developing a product to be sold for a specific target price.

Which of the price discrimination degrees are least practical or likely to be practiced?

A movie theater that charges a lower price for matinees than for evening showings is engaging in

A firm produces a product at a fixed marginal cost of $2 and sells the product on two different markets (A and B) . The demand on market A is QA = 10 - P. The demand on market B is QB = 20 - P. What quantity should the firm sell on market B?

The Nature and Scope of Managerial Economics

Demand, Supply, and Equilibrium Analysis

Optimization Techniques and New Management Tools

Demand Theory

Demand Estimation

Demand Forecasting

Production Theory and Estimation

Cost Theory and Estimation

Market Structure: Perfect Competition, Monopoly, and Monopolistic Competition

Oligopoly and Firm Architecture

Game Theory and Strategic Behavior

Regulation and Antitrust: The Role of Government in the Economy

Risk Analysis

Long-Run Investment Decisions: Capital Budgeting

Filters

A firm produces a product at a fixed marginal cost of $2 and sells the product on two different markets (A and B) . The demand on market A is Q_A = 10 - P. The demand on market B is Q_B = 20 - P. What quantity should the firm sell on market B?