Question 1

Which of the following consumer segments are benefited by price discrimination?

Accepted Answer

A) Consumers with high income 
B) Consumers with perfectly inelastic demand 
C) Consumers with highly elastic demand 
D) Consumers with more than one source of income 
A) Consumers with high income 
B) Consumers with perfectly inelastic demand 
C) Consumers with highly elastic demand 
D) Consumers with more than one source of income C

Question 2

The local zoo has a pricing policy in which senior citizens pay a lower price than younger adults.This policy is:

Accepted Answer

A) a form of perfect price discrimination. 
B) a form of third-degree price discrimination. 
C) certain to reduce total revenues for the zoo. 
D) certain to reduce the number of visitors to the zoo. 
A) a form of perfect price discrimination. 
B) a form of third-degree price discrimination. 
C) certain to reduce total revenues for the zoo. 
D) certain to reduce the number of visitors to the zoo. B

Question 3

Which of the following price discrimination strategies allows a monopolist to distribute a product/service most efficiently between two periods of time?

Accepted Answer

A) Predatory pricing 
B) Peak-load pricing 
C) Block pricing 
D) Two-part tariff 
A) Predatory pricing 
B) Peak-load pricing 
C) Block pricing 
D) Two-part tariff B

Question 4

When airlines charge different fares for seats on the same flight depending on how far in advance an airline ticket has been purchased,it is using a(n)_____ strategy.

Accepted Answer

A) dumping 
B) block pricing 
C) first-degree price discrimination 
D) intertemporal price discrimination 
A) dumping 
B) block pricing 
C) first-degree price discrimination 
D) intertemporal price discrimination

Question 5

Which of the following is the closest example of perfect price discrimination?

Accepted Answer

A) An airline providing discounts to its frequent-flyers as they fly more 
B) At an auction of antique furniture,each piece of furniture is sold to the highest bidder 
C) A golf-club imposing a very high entry fee to reduce membership requests 
D) An electric utility charging higher rates to the customers in the summer season than in the winter season 
A) An airline providing discounts to its frequent-flyers as they fly more 
B) At an auction of antique furniture,each piece of furniture is sold to the highest bidder 
C) A golf-club imposing a very high entry fee to reduce membership requests 
D) An electric utility charging higher rates to the customers in the summer season than in the winter season

Question 6

Use the following figure to answer the question : Figure 12-1 : shows the downward sloping demand and marginal revenue [MR] curves of a monopolist. The MR curve intersects the marginal cost [MC] curve at point B. MC is constant at the PS1U1B11S1U1B0.
 
-Refer to Figure 12-1. If the monopolist cannot price discriminate, deadweight loss will be equal to:

Accepted Answer

A) the area P3AP2. 
B) the area P3CP1. 
C) the area ABC. 
D) zero. 
A) the area P3AP2. 
B) the area P3CP1. 
C) the area ABC. 
D) zero.

Question 7

Identify the correct statement about price discrimination.

Accepted Answer

A) Price discrimination is costless. 
B) Price discrimination is effective only if demand for the product is perfectly inelastic. 
C) Price discrimination is effective when producers face a downward-sloping demand curve. 
D) Price discrimination increases consumer surplus. 
A) Price discrimination is costless. 
B) Price discrimination is effective only if demand for the product is perfectly inelastic. 
C) Price discrimination is effective when producers face a downward-sloping demand curve. 
D) Price discrimination increases consumer surplus.

Question 8

Use the following figure to answer the question : Figure 12-3 :  shows the indifference curves US1U1B11S1U1B0 and US1U1B12S1U1B0 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.
 
-Refer to Figure 12-3.The price of a court hour to the consumer,in terms of other goods,is:

Accepted Answer

A) OI/OZ. 
B) OI/BZ. 
C) OI/OB. 
D) AI/BZ. 
A) OI/OZ. 
B) OI/BZ. 
C) OI/OB. 
D) AI/BZ.

Question 9

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

Accepted Answer

A) The non-price discriminating monopolist will produce a higher amount of output. 
B) The non-price discriminating monopolist will have more producer surplus. 
C) The non-price discriminating monopolist will impose a greater efficiency loss. 
D) The non-price discriminating monopolist will capture more consumer surplus. 
A) The non-price discriminating monopolist will produce a higher amount of output. 
B) The non-price discriminating monopolist will have more producer surplus. 
C) The non-price discriminating monopolist will impose a greater efficiency loss. 
D) The non-price discriminating monopolist will capture more consumer surplus.

Question 10

Under perfect price discrimination,_____.

Accepted Answer

A) each customer pays the same price but receives a different quantity 
B) each customer pays a different price based on their willingness to pay 
C) efficiency loss is maximized 
D) price is always above marginal revenue 
A) each customer pays the same price but receives a different quantity 
B) each customer pays a different price based on their willingness to pay 
C) efficiency loss is maximized 
D) price is always above marginal revenue

Question 11

Use the following figure to answer the question : Figure 12-1 : shows the downward sloping demand and marginal revenue [MR] curves of a monopolist. The MR curve intersects the marginal cost [MC] curve at point B. MC is constant at the PS1U1B11S1U1B0.
 
-Refer to Figure 12-1. If the monopolist cannot price discriminate, profit will be equal to:

Accepted Answer

A) the area P3AP2. 
B) the area P2AQ1O. 
C) the area P2ABP1. 
D) zero. 
A) the area P3AP2. 
B) the area P2AQ1O. 
C) the area P2ABP1. 
D) zero.

Question 12

Which of the following is not an example of price discrimination?

Accepted Answer

A) A restaurant sets a fixed cover charge in addition to menu charges. 
B) A phone company charges different rates to residential and business users. 
C) An electric company charges different rates to senior citizens and younger adults. 
D) An airline sets different fares for adults and children. 
A) A restaurant sets a fixed cover charge in addition to menu charges. 
B) A phone company charges different rates to residential and business users. 
C) An electric company charges different rates to senior citizens and younger adults. 
D) An airline sets different fares for adults and children.

Question 13

Use the following figure to answer the question : Figure 12-2 :  shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist.  
-Refer to Figure 12-2.With perfect price discrimination,the monopolist will receive producer surplus equal to the area:

Accepted Answer

A) ACFH. 
B) BCFH. 
C) AVFH. 
D) AWEH. 
A) ACFH. 
B) BCFH. 
C) AVFH. 
D) AWEH.

Question 14

Which of the following is needed for successful price discrimination?

Accepted Answer

A) The firm must have a high market share. 
B) The firm must have more than one product line. 
C) The firm must be able to engage in arbitrage. 
D) The firm must have some consumers whose demand is relatively price inelastic. 
A) The firm must have a high market share. 
B) The firm must have more than one product line. 
C) The firm must be able to engage in arbitrage. 
D) The firm must have some consumers whose demand is relatively price inelastic.

Question 15

A two-part tariff involves:

Accepted Answer

A) a fixed entry fee plus a variable per-unit price. 
B) a variable entry fee plus a variable per-unit price. 
C) a fixed entry fee plus a fixed per-unit price. 
D) a variable entry fee plus a fixed per-unit price. 
A) a fixed entry fee plus a variable per-unit price. 
B) a variable entry fee plus a variable per-unit price. 
C) a fixed entry fee plus a fixed per-unit price. 
D) a variable entry fee plus a fixed per-unit price.

Question 16

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

Accepted Answer

A) it is easier to prevent arbitrage of a service than of a manufactured product. 
B) monopoly is more common in the production of services than in production of manufactured goods. 
C) price elasticities of demand differ more among consumers of services than customers of manufactured goods. 
D) firms selling services are more likely to have constant marginal cost curves. 
A) it is easier to prevent arbitrage of a service than of a manufactured product. 
B) monopoly is more common in the production of services than in production of manufactured goods. 
C) price elasticities of demand differ more among consumers of services than customers of manufactured goods. 
D) firms selling services are more likely to have constant marginal cost curves.

Question 17

A two-part tariff is a form of:

Accepted Answer

A) first-degree price discrimination because average cost falls with quantity purchased. 
B) second-degree price discrimination because average price paid by the consumer falls with higher quantity purchased. 
C) block pricing because marginal cost rises with quantity sold. 
D) third-degree price discrimination because different customers pay different prices. 
A) first-degree price discrimination because average cost falls with quantity purchased. 
B) second-degree price discrimination because average price paid by the consumer falls with higher quantity purchased. 
C) block pricing because marginal cost rises with quantity sold. 
D) third-degree price discrimination because different customers pay different prices.

Question 18

Derive the first-order conditions for profit maximization for a monopolist practicing price-discrimination.

Accepted Answer

Assume the monopoly sells in two markets

Question 19

The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist.  
Refer to Figure 12-2.A monopolist practicing first-degree price discrimination will sell _____ quantity of output.

Accepted Answer

A) OL 
B) OK 
C) OJ 
D) KL 
A) OL 
B) OK 
C) OJ 
D) KL

Question 20

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

Accepted Answer

A) increases the inefficiency of the market. 
B) reduces economic profits. 
C) typically increases total output. 
D) results in lower input prices. 
A) increases the inefficiency of the market. 
B) reduces economic profits. 
C) typically increases total output. 
D) results in lower input prices.

Which of the following consumer segments are benefited by price discrimination?

The local zoo has a pricing policy in which senior citizens pay a lower price than younger adults.This policy is:

Which of the following price discrimination strategies allows a monopolist to distribute a product/service most efficiently between two periods of time?

When airlines charge different fares for seats on the same flight depending on how far in advance an airline ticket has been purchased,it is using a(n)_____ strategy.

Which of the following is the closest example of perfect price discrimination?

Identify the correct statement about price discrimination.

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

Under perfect price discrimination,_____.

Which of the following is not an example of price discrimination?

Which of the following is needed for successful price discrimination?

A two-part tariff involves:

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

A two-part tariff is a form of:

Derive the first-order conditions for profit maximization for a monopolist practicing price-discrimination.

The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist. Refer to Figure 12-2.A monopolist practicing first-degree price discrimination will sell _____ quantity of output.

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

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters

Exam 12: Product Pricing With Monopoly Power

Which of the following consumer segments are benefited by price discrimination?

The local zoo has a pricing policy in which senior citizens pay a lower price than younger adults.This policy is:

Which of the following price discrimination strategies allows a monopolist to distribute a product/service most efficiently between two periods of time?

When airlines charge different fares for seats on the same flight depending on how far in advance an airline ticket has been purchased,it is using a(n)_____ strategy.

Which of the following is the closest example of perfect price discrimination?

Identify the correct statement about price discrimination.

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

Under perfect price discrimination,_____.

Which of the following is not an example of price discrimination?

Which of the following is needed for successful price discrimination?

A two-part tariff involves:

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

A two-part tariff is a form of:

Derive the first-order conditions for profit maximization for a monopolist practicing price-discrimination.

The following figure shows the downward sloping demand and marginal revenue [MR] curves and the upward sloping marginal cost [MC] curve of a monopolist. Refer to Figure 12-2.A monopolist practicing first-degree price discrimination will sell _____ quantity of output.

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

An Introduction to Microeconomics

Supply and Demand

The Theory of Consumer Choice

Individual and Market Demand

Using Consumer Choice Theory

Exchange, Efficiency, and Prices

Production

The Cost of Production

Profit Maximization in Perfectly Competitive Markets

Using the Competitive Model

Monopoly

Monopolistic Competition and Oligopoly

Game Theory and the Economics of Information

Using Noncompetitive Market Models

Employment and Pricing of Inputs

Wages, Rent, Interest, and Profit

Using Input Market Analysis

General Equilibrium Analysis and Economic Efficiency

Public Goods and Externalities

Filters