Exam 16: Pricing Strategy

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 such that it charges a fixed fee and a per-unit price equal to the competitive price.(This is also called an optimal two-part tariff.)What is the quantity it should produce?

If a firm could practice perfect price discrimination, it would

With perfect price discrimination, the marginal revenue curve

Price discrimination is possible in which of the following market structures? a)perfect competition b)monopoly c)oligopoly d)monopolistic competition

Which of the following statements is true about optimal two-part tariff and perfect price discrimination for a given demand curve?

Universities offer merit awards to students who ordinarily would not qualify for other 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 university's decision to grant merit awards is motivated by economic efficiency.

Joss is a marketing consultant.Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report.Iris is willing to pay $500 for the service while Daphne is willing to pay $800.Suppose that the opportunity cost of Joss's time is $1,200.Assume that Iris and Daphne do not know each other.If the price is $800 per copy,

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

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

Are sellers who practice arbitrage taking advantage of buyers?

If marginal costs differ quite substantially from average total costs, then using a cost-plus pricing schedule will not lead to the profit maximizing price.

Hotels routinely increase the prices they charge for rooms on weekends when large numbers of tourists are in town.It is not uncommon for a hotel room that normally costs $149 to cost as much as $649 during the Grey Cup, or the Stanley Cup.Which of the following statements is true?

Joss is a marketing consultant.Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report.Iris is willing to pay $500 for the service while Daphne is willing to pay $800.Suppose that the opportunity cost of Joss's time is $1,200.Assume that Iris and Daphne do not know each other.If the price is $500 per copy,

Arbitrage

One reason why McDonald's charges a single price for its products is that it is difficult and costly for the company to determine each individual consumer's willingness to pay.

The Toronto Transit Commission (TTC)subway system offers senior citizens discounted fares for TTC rides.This suggests that the TTC believe that senior citizens have a ________ demand for subway, bus, and streetcar rides.

Assume a firm is able to use an optimal two-part tariff. a.Is the outcome economically efficient? Why or why not? b.What happens to consumer surplus? c.Does this represent perfect price discrimination? Why or why not?

Figure 16.2 Plato Playhouse, a theatre company in the university town of Wegg, caters to two groups of customers: students and the non-student population. Figure 16.2 shows the demand curves for the two groups of customers. -Refer to Figure 16.2.Suppose Plato Playhouse price discriminates.Which of the following statements is true?

Lou buys classic video games at a garage sale for $30 and resells it on eBay to Kyle for $60.Which of the following statements is true?

Figure 16.2 Plato Playhouse, a theatre company in the university town of Wegg, caters to two groups of customers: students and the non-student population. Figure 16.2 shows the demand curves for the two groups of customers. -Refer to Figure 16.2.What is the quantity sold to each group of customer and what is the total quantity sold?