Exam 16: Pricing Strategy

Figure 16-6 Watanabe Sensei operates the only martial arts school in Hartfield. For simplicity, assume that consumers have identical demand curves and that Sensei knows what this demand curve is. Figure 16-6 shows this demand curve. -Refer to Figure 16-6. If Sensei acts as a monopolist and charges the profit-maximizing price, what is the consumer surplus received by his customers?

Many people sell goods through eBay at prices that are higher than the prices they paid for these goods. Economists consider these transactions as

Which of the following is a reason why airline yield management is an effective method to increase revenue?

Dell Computers allows potential consumers to customize personal computers to their desires. Dell's strategy is successful because offering bundles that more exactly meets a consumer's preference allows Dell to extract more consumer surplus.

Consumers who will pay high prices to be among the first to own certain new products are called

The law of one price

Which of the following pricing strategies allows a firm to earn economic profit?

Figure 16-7 The Lizard Lounge is well known for its exotic cocktails. Figure 16-7 shows its estimated demand curve for cocktails. -The Walt Disney Company uses cost-plus pricing to determine the prices it charges for admission and rides at Disneyland and Walt Disney World.

With perfect price discrimination there is

Early adopters are consumers who will pay a high price to be among the first to own new products.

What is perfect price discrimination and why do economists believe that no firm is able to practice perfect price discrimination?

If a firm could practice perfect price discrimination, it would

Colleges offer merit awards to students who ordinarily would not qualify for financial help. Some have criticized this on grounds that merit awards disproportionately benefit students from wealthier communities with better school systems, siphoning resources away from lower-income students with greater financial need. A college's decision to grant merit awards is motivated by economic efficiency.

If Mort's House of Flowers sells one dozen roses to different customers at different prices, economists would consider this an example of

College students and faculty members have a more elastic demand than the general public for Apple's iMac desktop computers. From this we can conclude that

The Athenian Theatre sells play tickets for the same play at different prices: a lower price to those who opt for the seats at the back of the theatre and a higher price for those who purchase seats in the front, around the stage. Which of the following statements is true?

Consider three pricing strategies that the firm can pursue: a. optimal two-part tariff pricing B. perfect price discrimination C. single-price monopoly pricing Of these three strategies, which method gives the firm the highest profit?

Bubba's Hula Shack bar and bistro has begun giving customers who can show proof that they arrived at the establishment by public transportation a 10 percent discount on their total bill. This is an example of

Figure 16-6 Watanabe Sensei operates the only martial arts school in Hartfield. For simplicity, assume that consumers have identical demand curves and that Sensei knows what this demand curve is. Figure 16-6 shows this demand curve. -Refer to Figure 16-6. With this pricing scheme-a competitive price for the classes and a one-time membership fee-what amount of producer surplus will Sensei earn?

An article on how prices in South Bend, Indiana rise during Notre Dame home football games noted: "For the Sept. 16 game against the University of Michigan, the South Bend Marriott is charging $649 a night for a double room. ...... The Marriott's regular weekend price is $149 a night." Source: Ilan Brat, "Notre Dame Football Introduces Its Fans To Inflationary Spiral," Wall Street Journal, September 7, 2006, p. A1. Which of the following statements is true?