Question 1

Consumer surplus is completely transferred to the price discriminating monopoly firm as profit under _____.

Accepted Answer

A) first-degree price discrimination 
B) predatory pricing 
C) third-degree price discrimination 
D) block pricing 
A) first-degree price discrimination 
B) predatory pricing 
C) third-degree price discrimination 
D) block pricing

Question 2

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.What will be the consumer surplus when the monopolist practices first-degree price discrimination?

Accepted Answer

A) WVE 
B) CVF 
C) ZVN 
D) Zero 
A) WVE 
B) CVF 
C) ZVN 
D) Zero

Question 3

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.Comparing the result of perfect competition with that of a perfectly price-discriminating monopolist,there is an efficiency loss equal to:

Accepted Answer

A) area VWE. 
B) area HEF. 
C) area JHFK. 
D) zero.There will be no efficiency loss in either case. 
A) area VWE. 
B) area HEF. 
C) area JHFK. 
D) zero.There will be no efficiency loss in either case.

Question 4

Lewis owns an exclusive fashion accessories store and charges all consumers a uniform price for a particular product.Recently,however,he has realized that some of his customers are actually willing to pay a higher price for the items he sells,while some others feel that his prices are a little too high.Given this information,which of the following will not affect his ability to discriminate prices between these two consumer segments?

Accepted Answer

A) His level of monopoly power in this market 
B) His total investment in this business 
C) His ability to segment the market into high demand and low demand users 
D) His ability to prevent arbitrage 
A) His level of monopoly power in this market 
B) His total investment in this business 
C) His ability to segment the market into high demand and low demand users 
D) His ability to prevent arbitrage

Question 5

A monopolist practicing second-degree price discrimination and facing a constant marginal cost:

Accepted Answer

A) should charge a higher price to the market segment that has the more elastic demand. 
B) sets the price schedule according to the number of units purchased by the consumers. 
C) need not worry about preventing resale of the product. 
D) will supply more output than a perfectly price discriminating monopolist. 
A) should charge a higher price to the market segment that has the more elastic demand. 
B) sets the price schedule according to the number of units purchased by the consumers. 
C) need not worry about preventing resale of the product. 
D) will supply more output than a perfectly price discriminating monopolist.

Question 6

A popular restaurant chain,Grill n' Chill,offers its customers a 0.5% discount on a bill of $100-$200,a 1% discount on a bill of $201-$300,a 1.5% discount on a bill of $301-$400,and so on.Thus,customers enjoy a higher discount when they order more food.Which of the following forms of price discrimination is being practiced by this restaurant chain?

Accepted Answer

A) Third-degree price discrimination 
B) Intertemporal price discrimination 
C) First-degree price discrimination 
D) Second-degree price discrimination 
A) Third-degree price discrimination 
B) Intertemporal price discrimination 
C) First-degree price discrimination 
D) Second-degree price discrimination

Question 7

Which of the following is not a prerequisite for practicing third-degree price discrimination?

Accepted Answer

A) Some degree of monopoly power 
B) Ability to separate customers into two or more identifiable groups 
C) Some mechanism to prevent resale of the product among groups 
D) A perfectly competitive market for inputs 
A) Some degree of monopoly power 
B) Ability to separate customers into two or more identifiable groups 
C) Some mechanism to prevent resale of the product among groups 
D) A perfectly competitive market for inputs

Question 8

Which of the following is true of arbitrage?

Accepted Answer

A) It is the revenue from the sale of a used product. 
B) It is the resale of a product among market segments. 
C) It is the profit from initial sales of a product. 
D) It is the ability of a firm to discriminate prices among customers. 
A) It is the revenue from the sale of a used product. 
B) It is the resale of a product among market segments. 
C) It is the profit from initial sales of a product. 
D) It is the ability of a firm to discriminate prices among customers.

Question 9

Why is popcorn so expensive at the movies? Make a case for each of the following - that the high price of popcorn is price discrimination and that it is not price discrimination.Identify all the factors that are or are not present,enabling price discrimination by the theatre owner.

Accepted Answer

Price discrimination requires 3 main fac

Question 10

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.Compared to perfect competition,monopoly pricing introduces efficiency loss equal to the area:

Accepted Answer

A) VWE. 
B) ZVN. 
C) HEF. 
D) JHFK. 
A) VWE. 
B) ZVN. 
C) HEF. 
D) JHFK.

Question 11

Which of the following is true of a price-discriminating monopolist who is selling output in two distinct markets?

Accepted Answer

A) Price will be higher in the market in which demand is unit-elastic. 
B) Price will be lower in the market in which demand is more elastic. 
C) Price will be equal in each market,as long as there is a constant marginal cost. 
D) Price will be lower in the market for which there are fewer substitute goods. 
A) Price will be higher in the market in which demand is unit-elastic. 
B) Price will be lower in the market in which demand is more elastic. 
C) Price will be equal in each market,as long as there is a constant marginal cost. 
D) Price will be lower in the market for which there are fewer substitute goods.

Question 12

A profit-maximizing monopolist employing a two-part tariff on consumers having different demands,_____.

Accepted Answer

A) should simply set price to maximize total revenue 
B) should charge a single price,with no entry fee,like a regular monopolist 
C) should set price equal to average cost plus a constant profit margin 
D) does not have a clearly defined profit-maximizing pricing scheme 
A) should simply set price to maximize total revenue 
B) should charge a single price,with no entry fee,like a regular monopolist 
C) should set price equal to average cost plus a constant profit margin 
D) does not have a clearly defined profit-maximizing pricing scheme

Question 13

The efficiency gains from peak-load pricing depend largely upon:

Accepted Answer

A) the amount of regulation in the market. 
B) the ability of users to cut back on consumption during peak periods. 
C) the pricing strategy followed by the firm in the past. 
D) the productivity of the inputs used in producing the output. 
A) the amount of regulation in the market. 
B) the ability of users to cut back on consumption during peak periods. 
C) the pricing strategy followed by the firm in the past. 
D) the productivity of the inputs used in producing the output.

Question 14

A perfectly price-discriminating monopolist:

Accepted Answer

A) restricts output more than an ordinary monopolist does. 
B) sells the last unit of output where price equals marginal cost. 
C) charges all consumers the same price but sells different quantities to each. 
D) obtains less producer surplus than does an non-price discriminating monopolist. 
A) restricts output more than an ordinary monopolist does. 
B) sells the last unit of output where price equals marginal cost. 
C) charges all consumers the same price but sells different quantities to each. 
D) obtains less producer surplus than does an non-price discriminating monopolist.

Question 15

Which of the following is the best example of intertemporal price discrimination?

Accepted Answer

A) Awarding financial aid to offset college tuition fees 
B) Releasing movies on DVD six months after they are released in a theater 
C) Charging less for a second pizza after the consumer has paid the full price for the first pizza 
D) Charging people with health care insurance more for medical care relative to those without insurance 
A) Awarding financial aid to offset college tuition fees 
B) Releasing movies on DVD six months after they are released in a theater 
C) Charging less for a second pizza after the consumer has paid the full price for the first pizza 
D) Charging people with health care insurance more for medical care relative to those without insurance

Question 16

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 price charged in each market,if the marginal revenue [MR] from market A is 15 while the same from market B is 30.

Accepted Answer

A) PA = 200;PB = 169.89 
B) PA = 500;PB = 208.29 
C) PA = 105;PB = 108.39 
D) PA = 405;PB = 138.89 
A) PA = 200;PB = 169.89 
B) PA = 500;PB = 208.29 
C) PA = 105;PB = 108.39 
D) PA = 405;PB = 138.89

Question 17

Why is it difficult to implement first-degree price discrimination?

Accepted Answer

The implementation of first-degree price

Question 18

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 practices perfect price discrimination, consumer surplus 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 19

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:

Accepted Answer

A) predatory pricing. 
B) price skimming. 
C) arbitrage. 
D) price discrimination. 
A) predatory pricing. 
B) price skimming. 
C) arbitrage. 
D) price discrimination.

Question 20

Which of the following products/services provides the least scope for arbitrage?

Accepted Answer

A) Sports shoes 
B) Live concerts 
C) Jewelry 
D) Books 
A) Sports shoes 
B) Live concerts 
C) Jewelry 
D) Books

Consumer surplus is completely transferred to the price discriminating monopoly firm as profit under _____.

A monopolist practicing second-degree price discrimination and facing a constant marginal cost:

Which of the following is not a prerequisite for practicing third-degree price discrimination?

Which of the following is true of arbitrage?

Why is popcorn so expensive at the movies? Make a case for each of the following - that the high price of popcorn is price discrimination and that it is not price discrimination.Identify all the factors that are or are not present,enabling price discrimination by the theatre owner.

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.Compared to perfect competition,monopoly pricing introduces efficiency loss equal to the area:

Which of the following is true of a price-discriminating monopolist who is selling output in two distinct markets?

A profit-maximizing monopolist employing a two-part tariff on consumers having different demands,_____.

The efficiency gains from peak-load pricing depend largely upon:

A perfectly price-discriminating monopolist:

Which of the following is the best example of intertemporal price discrimination?

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 price charged in each market,if the marginal revenue [MR] from market A is 15 while the same from market B is 30.

Why is it difficult to implement first-degree price discrimination?

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 products/services provides the least scope for arbitrage?

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

Consumer surplus is completely transferred to the price discriminating monopoly firm as profit under _____.

A monopolist practicing second-degree price discrimination and facing a constant marginal cost:

Which of the following is not a prerequisite for practicing third-degree price discrimination?

Which of the following is true of arbitrage?

Why is popcorn so expensive at the movies? Make a case for each of the following - that the high price of popcorn is price discrimination and that it is not price discrimination.Identify all the factors that are or are not present,enabling price discrimination by the theatre owner.

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.Compared to perfect competition,monopoly pricing introduces efficiency loss equal to the area:

Which of the following is true of a price-discriminating monopolist who is selling output in two distinct markets?

A profit-maximizing monopolist employing a two-part tariff on consumers having different demands,_____.

The efficiency gains from peak-load pricing depend largely upon:

A perfectly price-discriminating monopolist:

Which of the following is the best example of intertemporal price discrimination?

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 price charged in each market,if the marginal revenue [MR] from market A is 15 while the same from market B is 30.

Why is it difficult to implement first-degree price discrimination?

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 products/services provides the least scope for arbitrage?

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