Exam 12: Product Pricing With Monopoly Power

The strategy of charging different prices to different customers,for the same product,based on the differences in their demand elasticities is referred to as:

Which of the following is true of the comparison between a non-price discriminating monopoly and a perfectly price discriminating monopoly?

With peak-load pricing,a firm charges a different price in each period,because:

Consider a profit-maximizing monopolist whose consumers have identical demand curves.Which of the following will be true if the firm employs a two-part tariff pricing strategy for these consumers?

The following figure shows the indifference curves U₁ and U₂ of a consumer choosing between hours devoted at a tennis club and other goods.All consumers in this market have identical demand curves.IZ is the original budget line of a representative consumer,which shifts to AB when the club begins to charge an entry fee. Figure 12-3 -Refer to Figure 12-3.The price of a court hour to the consumer,in terms of other goods,is:

What is a two-part tariff? Make up a numerical example to support your definition.

What is peak-load pricing and why is it advantageous compared to charging a single price?

Comparing a price-discriminating monopoly firm with a single-price monopoly,one tends to find that price discrimination:

Economists generally view the practice of perfect price discrimination favorably because it:

Consider a monopolist selling her output in two markets,A and B.The price elasticity of demand in market A is 1.5,while the same in market B is 2.5.Calculate the marginal revenue [MR] from each market,if the monopolist charges $300 for the product in both the markets.

Price discrimination is more common for firms selling services than for manufacturing firms because:

Under perfect price discrimination,_____.

A two-part tariff is a form of:

First-degree price discrimination is _____.

The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist. Figure 12-2 -Refer to Figure 12-2.Compared to the situation when there is no price discrimination,first-degree price discrimination causes the consumer surplus to decline by the area:

Which of the following is an example of price discrimination?

A perfectly price-discriminating monopolist:

The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist. Figure 12-2 -Refer to Figure 12-2.Compared to perfect competition,monopoly pricing introduces efficiency loss equal to the area:

Suppose a restaurant has two types of customers,group A and group B.Group A customers have a price elasticity of demand equal to 6,while group B customers have a price elasticity of demand equal to 2.If the firm seeks to maximize profits by discriminating prices,and it charges group B customers $40 per meal,what price should it charge group A customers?

With block pricing,consumers typically pay a price that: