Exam 10: Pricing Strategies for the Firm

Promotional pricing is designed to take advantage of differences in the price elasticity of demand among customers.As such, it is an application of first-degree price discrimination.

(True/False)

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Question 41

The difference between the total willingness to pay for a good and the amount actually spent measures:

(Multiple Choice)

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Question 42

Which of the following statements is correct?

(Multiple Choice)

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Question 43

As macroeconomic conditions improve and consumers' incomes and wealth increase, their demand for many products tends to become price inelastic.As such, the ability of firms to mark up price above cost will .

(Multiple Choice)

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Question 44

The situation in which a firm is able to charge the maximum price consumers are willing to pay for each unit of output the firm sells is referred to as:

(Multiple Choice)

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Question 45

To the extent that customers can resell products to each other, the effectiveness of a price discrimination strategy will be undermined.

(True/False)

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Question 46

BOGOs, i.e., buy-one, get-one-free offers, are an example of third-degree price discrimination.

(True/False)

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Question 47

All else constant, as the price elasticity of demand decreases, so does the marginal revenue resulting from a decrease in price.

(True/False)

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Question 48

Assume a change in price causes the price elasticity of demand for a good (in absolute value)and marginal revenue to decrease.In this case we can conclude that the price of the good was:

(Multiple Choice)

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Question 49

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?

(Essay)

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Question 50

Certain hotels offer promotional strategies in which kids under 12 eat free at the hotel's restaurant.This is an example of second-degree price discrimination.

(True/False)

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Question 51

Assume there is a decrease in the number of substitutes for a good produced by a profit-maximizing price-setting firm.All else constant, this would cause the firm's ability to markup price above average cost to:

(Multiple Choice)

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Question 52

If a firm is successful in its efforts to reduce the price elasticity of demand for its product, all else constant, the optimal markup that can be used in setting price will increase.

(True/False)

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Question 53

The total willingness to pay for a given number of units of a good or service is determined by multiplying the equilibrium price of the good by the number of units purchased.

(True/False)

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Question 54

Assume the economy is headed into a recession.Considering this, and recognizing that firms are slow to change the prices they charge for their products, are firms more or less likely to be able to pursue an effective markup pricing strategy in their pursuit of positive economic profit? Why?

(Essay)

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Question 55

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

(Multiple Choice)

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Question 56

In the case of a perfectly competitive firm, the optimal markup over marginal cost is 0 percent.

(True/False)

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Question 57

So long as the absolute value of the price elasticity of demand for a firm's output is greater than 0, the firm's optimal markup factor will be positive as well.

(True/False)

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Question 58

The practice of setting price by increasing the average costs of production by some percentage is referred to as:

(Multiple Choice)

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Question 59

Effective price discrimination will enable a perfectly competitive firm to earn positive economic profits in both the short run and the long run.

(True/False)

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Question 60

Showing 41 - 60 of 67

Promotional pricing is designed to take advantage of differences in the price elasticity of demand among customers.As such, it is an application of first-degree price discrimination.

The difference between the total willingness to pay for a good and the amount actually spent measures:

Which of the following statements is correct?

As macroeconomic conditions improve and consumers' incomes and wealth increase, their demand for many products tends to become price inelastic.As such, the ability of firms to mark up price above cost will .

The situation in which a firm is able to charge the maximum price consumers are willing to pay for each unit of output the firm sells is referred to as:

To the extent that customers can resell products to each other, the effectiveness of a price discrimination strategy will be undermined.

BOGOs, i.e., buy-one, get-one-free offers, are an example of third-degree price discrimination.

All else constant, as the price elasticity of demand decreases, so does the marginal revenue resulting from a decrease in price.

Assume a change in price causes the price elasticity of demand for a good (in absolute value)and marginal revenue to decrease.In this case we can conclude that the price of the good was:

Certain hotels offer promotional strategies in which kids under 12 eat free at the hotel's restaurant.This is an example of second-degree price discrimination.

Assume there is a decrease in the number of substitutes for a good produced by a profit-maximizing price-setting firm.All else constant, this would cause the firm's ability to markup price above average cost to:

If a firm is successful in its efforts to reduce the price elasticity of demand for its product, all else constant, the optimal markup that can be used in setting price will increase.

The total willingness to pay for a given number of units of a good or service is determined by multiplying the equilibrium price of the good by the number of units purchased.

Assume the economy is headed into a recession.Considering this, and recognizing that firms are slow to change the prices they charge for their products, are firms more or less likely to be able to pursue an effective markup pricing strategy in their pursuit of positive economic profit? Why?

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

In the case of a perfectly competitive firm, the optimal markup over marginal cost is 0 percent.

So long as the absolute value of the price elasticity of demand for a firm's output is greater than 0, the firm's optimal markup factor will be positive as well.

The practice of setting price by increasing the average costs of production by some percentage is referred to as:

Effective price discrimination will enable a perfectly competitive firm to earn positive economic profits in both the short run and the long run.

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

Promotional pricing is designed to take advantage of differences in the price elasticity of demand among customers.As such, it is an application of first-degree price discrimination.

The difference between the total willingness to pay for a good and the amount actually spent measures:

Which of the following statements is correct?

As macroeconomic conditions improve and consumers' incomes and wealth increase, their demand for many products tends to become ________ price inelastic.As such, the ability of firms to mark up price above cost will ________.

The situation in which a firm is able to charge the maximum price consumers are willing to pay for each unit of output the firm sells is referred to as:

To the extent that customers can resell products to each other, the effectiveness of a price discrimination strategy will be undermined.

BOGOs, i.e., buy-one, get-one-free offers, are an example of third-degree price discrimination.

All else constant, as the price elasticity of demand decreases, so does the marginal revenue resulting from a decrease in price.

Assume a change in price causes the price elasticity of demand for a good (in absolute value)and marginal revenue to decrease.In this case we can conclude that the price of the good was:

Certain hotels offer promotional strategies in which kids under 12 eat free at the hotel's restaurant.This is an example of second-degree price discrimination.

Assume there is a decrease in the number of substitutes for a good produced by a profit-maximizing price-setting firm.All else constant, this would cause the firm's ability to markup price above average cost to:

If a firm is successful in its efforts to reduce the price elasticity of demand for its product, all else constant, the optimal markup that can be used in setting price will increase.

The total willingness to pay for a given number of units of a good or service is determined by multiplying the equilibrium price of the good by the number of units purchased.

Assume the economy is headed into a recession.Considering this, and recognizing that firms are slow to change the prices they charge for their products, are firms more or less likely to be able to pursue an effective markup pricing strategy in their pursuit of positive economic profit? Why?

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

In the case of a perfectly competitive firm, the optimal markup over marginal cost is 0 percent.

So long as the absolute value of the price elasticity of demand for a firm's output is greater than 0, the firm's optimal markup factor will be positive as well.

The practice of setting price by increasing the average costs of production by some percentage is referred to as:

Effective price discrimination will enable a perfectly competitive firm to earn positive economic profits in both the short run and the long run.

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

As macroeconomic conditions improve and consumers' incomes and wealth increase, their demand for many products tends to become price inelastic.As such, the ability of firms to mark up price above cost will .