Question 1

Season tickets for sporting events are an example of

Accepted Answer

A) bundling. 
B) two-part tariff. 
C) price discrimination. 
D) block pricing. 
A) bundling. 
B) two-part tariff. 
C) price discrimination. 
D) block pricing. A

Question 2

Refer to Figure 7.2.If Happy Times Theater charges one price to day customers and another price to night customers,then its total profit on the sale of tickets will

Accepted Answer

A) increase. 
B) stay the same. 
C) decrease. 
D) vary according to the slope of marginal revenue curve. 
A) increase. 
B) stay the same. 
C) decrease. 
D) vary according to the slope of marginal revenue curve. A

Question 3

A customer pays an admission fee to get into the local YMCA and also a monthly membership fee.This is called

Accepted Answer

A) bundling. 
B) two-part tariff. 
C) price discrimination. 
D) block pricing. 
A) bundling. 
B) two-part tariff. 
C) price discrimination. 
D) block pricing. B

Question 4

Bio seeds offers free genetically modified seeds (GMS)to farmers in developing countries the first season.The land accepts only GMS in any other cropping season.So providing free seeds in the first season is a strategic way to

Accepted Answer

A) bundle goods. 
B) administer a two-part tariff. 
C) enforce price discrimination. 
D) regulate future demand. 
A) bundle goods. 
B) administer a two-part tariff. 
C) enforce price discrimination. 
D) regulate future demand.

Question 5

The difference between what a consumer is willing to pay for a product and what she actually pays when buying it is known as

Accepted Answer

A) consumer surplus. 
B) the exchange rate. 
C) the inflation rate. 
D) price discrimination. 
A) consumer surplus. 
B) the exchange rate. 
C) the inflation rate. 
D) price discrimination.

Question 6

Many firms offer substantial rebates by mail or coupons for discounts at the point of sale.The people who use the rebates or coupons have ______ than the people who don't use them.

Accepted Answer

A) greater price sensitivity 
B) the same price sensitivity 
C) lesser price sensitivity 
D) inverted price sensitivity 
A) greater price sensitivity 
B) the same price sensitivity 
C) lesser price sensitivity 
D) inverted price sensitivity

Question 7

The Robinson-Patman Act limits the ability of the firms to

Accepted Answer

A) charge different prices to retailers. 
B) produce certain products. 
C) discriminate in terms of prices. 
D) use capital-intensive means of production. 
A) charge different prices to retailers. 
B) produce certain products. 
C) discriminate in terms of prices. 
D) use capital-intensive means of production.

Question 8

Offering a product at a price below marginal cost is a more effective pricing strategy if

Accepted Answer

A) information costs are higher. 
B) opportunity costs are higher. 
C) sunk costs are higher. 
D) information costs are lower. 
A) information costs are higher. 
B) opportunity costs are higher. 
C) sunk costs are higher. 
D) information costs are lower.

Question 9

Give examples of block pricing,bundling,price discrimination and two-part tariffs.

Accepted Answer

Packing 75 toilet tissue rolls for $3.75

Question 10

The cost plus pricing formula tends to ignore

Accepted Answer

A) incremental costs. 
B) customer quantity sensitivity. 
C) fixed costs. 
D) quotas. 
A) incremental costs. 
B) customer quantity sensitivity. 
C) fixed costs. 
D) quotas.

Question 11

The simple case of pricing with market power assumes that (a)all consumers are charged the same price,(b)the firm sells one product,(c)demand exists in one time period,and (d)competitors do not pursue pricing games.Economists insist on reviewing what happens as each assumption is relaxed one at a time.But it is clear that in the real world all four are relaxed simultaneously.Why does economic analysis insist on such an unrealistic analysis?

Accepted Answer

The use of models provides an opportunit

Question 12

A company might charge a customer different prices per unit,depending upon the number of units purchased.This is called

Accepted Answer

A) bundling. 
B) two-part tariff. 
C) price discrimination. 
D) block pricing. 
A) bundling. 
B) two-part tariff. 
C) price discrimination. 
D) block pricing.

Question 13

Implementation of a pricing strategy is complicated.Which of the following is a possible reason?

Accepted Answer

A) Optimal pricing policies can change over time. 
B) Firms change the technique of production over time. 
C) Companies follow the recommendations of the Robinson-Patman Act. 
D) Firms often do not differentiate their products. 
A) Optimal pricing policies can change over time. 
B) Firms change the technique of production over time. 
C) Companies follow the recommendations of the Robinson-Patman Act. 
D) Firms often do not differentiate their products.

Question 14

If Tiger Toys faces a demand curve of P = 85 − 0.25Q and a MC = ATC = 20,then the economic profits would be

Accepted Answer

A) $130. 
B) $6,825. 
C) $2,600. 
D) $4,225. 
A) $130. 
B) $6,825. 
C) $2,600. 
D) $4,225.

Question 15

Many college basketball programs require alumni to join a booster club before they can buy season tickets.This is an example of

Accepted Answer

A) a two-part tariff. 
B) first-degree price discrimination. 
C) block pricing. 
D) cost-plus pricing 
A) a two-part tariff. 
B) first-degree price discrimination. 
C) block pricing. 
D) cost-plus pricing

Question 16

If Tiger Toys faces a demand curve of P = 85 − 0.25Q and a MC = ATC = 20,then the output would be

Accepted Answer

A) 65.0 units. 
B) 85.0 units. 
C) 130.0 units. 
D) 32.5 units. 
A) 65.0 units. 
B) 85.0 units. 
C) 130.0 units. 
D) 32.5 units.

Question 17

Using cost plus pricing,what is the price if ATC = $23.50 and the target rate of return is 17 percent?

Accepted Answer

A) $28.31 
B) $138.24 
C) $29.38 
D) $46.74 
A) $28.31 
B) $138.24 
C) $29.38 
D) $46.74

Question 18

Two consumers,1 and 2,of the same product have the following demand curves:
Q1 = 500 - 10P and Q2 = 500 - 20P.MC for the firm is $10.Calculate the prices when the firm discriminates between the two consumers.Is this a good strategy,or should the firm charge the same price to both of them?

Accepted Answer

First we have to derive the MR curves fo

Question 19

Refer to Figure 7.2.If Happy Times Theater charges one price to all customers,then the profit will be:

Accepted Answer

A) $374.25. 
B) $62.50. 
C) $562.50. 
D) $150.00. 
A) $374.25. 
B) $62.50. 
C) $562.50. 
D) $150.00.

Question 20

P = 50 - 1/500Q is the demand curve for tickets.MC = $10 per ticket.What is the optimal price? Calculate the consumer surplus at this price.

Accepted Answer

For the given demand curve,MR

Exam 7: Pricing With Market Power

Season tickets for sporting events are an example of

Refer to Figure 7.2.If Happy Times Theater charges one price to day customers and another price to night customers,then its total profit on the sale of tickets will

A customer pays an admission fee to get into the local YMCA and also a monthly membership fee.This is called

Bio seeds offers free genetically modified seeds (GMS)to farmers in developing countries the first season.The land accepts only GMS in any other cropping season.So providing free seeds in the first season is a strategic way to

The difference between what a consumer is willing to pay for a product and what she actually pays when buying it is known as

Many firms offer substantial rebates by mail or coupons for discounts at the point of sale.The people who use the rebates or coupons have ______ than the people who don't use them.

The Robinson-Patman Act limits the ability of the firms to

Offering a product at a price below marginal cost is a more effective pricing strategy if

Give examples of block pricing,bundling,price discrimination and two-part tariffs.

The cost plus pricing formula tends to ignore

A company might charge a customer different prices per unit,depending upon the number of units purchased.This is called

Implementation of a pricing strategy is complicated.Which of the following is a possible reason?

If Tiger Toys faces a demand curve of P = 85 − 0.25Q and a MC = ATC = 20,then the economic profits would be

Many college basketball programs require alumni to join a booster club before they can buy season tickets.This is an example of

If Tiger Toys faces a demand curve of P = 85 − 0.25Q and a MC = ATC = 20,then the output would be

Using cost plus pricing,what is the price if ATC = $23.50 and the target rate of return is 17 percent?

Two consumers,1 and 2,of the same product have the following demand curves: Q1 = 500 - 10P and Q2 = 500 - 20P.MC for the firm is $10.Calculate the prices when the firm discriminates between the two consumers.Is this a good strategy,or should the firm charge the same price to both of them?

Refer to Figure 7.2.If Happy Times Theater charges one price to all customers,then the profit will be:

P = 50 - 1/500Q is the demand curve for tickets.MC = $10 per ticket.What is the optimal price? Calculate the consumer surplus at this price.

Introduction

Economists View of Behavior

Exchange and Markets

Demand

Production and Cost

Market Structure

Economics of Strategy: Creating and Capturing Value

Economics of Strategy: Game Theory

Incentive Conflicts and Contracts

Organizational Architecture

Decision Rights: the Level of Empowerment

Decision Rights: Bundling Tasks Into Jobs and Subunits

Attracting and Retaining Qualified Employees

Incentive Compensation

Individual Performance Evaluation

Divisional Performance Evaluation

Corporate Governance

Vertical Integration and Outsourcing

Leadership: Motivating Change Within Organizations

Understanding the Business Environment: the Economics of Regulation

Ethics and Organizational Architecture

Organizational Architecture and the Process of Management Innovation

Filters

Two consumers,1 and 2,of the same product have the following demand curves: Q₁ = 500 - 10P and Q₂ = 500 - 20P.MC for the firm is $10.Calculate the prices when the firm discriminates between the two consumers.Is this a good strategy,or should the firm charge the same price to both of them?