Exam 16: Pricing Strategy

Chantal owns a hairdressing salon which caters to two main groups of customers: residents of "The Chateau," a retirement community,and other residents in the neighborhood.Figure 16-3 shows the demand curves for the residents of the retirement community,labeled Market A,and other residents in the neighborhood,labeled Market B.The demand curves are not identical. -Refer to Figure 16-3.Suppose Chantal practices price discrimination.Which of the following statements is true?

When you buy at a low price in one market then sell at a higher price in another market you are engaging in

Firms engage in odd pricing when they charge prices that appear to be less than they really are;for example,charging a price of $4.95 instead of $5.00 and $.99 instead of $1.00.How have researchers tried to determine whether odd pricing is successful in convincing consumers that odd prices are less than they really are?

Most supermarkets charge the same price for the majority of goods sold.This suggest that

Price discrimination is possible in which of the following market structures? A.perfect competition B.monopoly C.oligopoly D.monopolistic competition

Figure 16-5 -Refer to Figure 16-5.Suppose the firm represented in the diagram decides to practice perfect price discrimination.What is the profit-maximizing quantity?

One reason why McDonald's charges a single price for its products is that it is difficult and costly for the company to determine each individual consumer's willingness to pay.

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 his producer surplus?

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 is least likely to benefit society as a whole?

Though large firms have the knowledge and resources to utilize a better pricing strategy,many choose to use cost-plus pricing.One reason for this is that

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

Cost-plus pricing is a reasonable way to determine the optimal price when

Why might an amusement park switch from charging admission to the park and charging for the rides to charging for admission but not charging for the rides?

Which of the following firms is most likely to use cost-plus pricing?

Draw a graph that shows producer surplus,consumer surplus,and deadweight loss in a market where the seller practices perfect price discrimination.Be sure to identify the demand curve,the marginal revenue curve,the marginal cost curve,and the profit maximizing quantity on the graph.

Harry attended a baseball card show in New York City where he bought a number of rookie cards of Pittsburgh Pirates baseball players from the 1950s and 1960s.Harry then sold the cards in Pittsburgh,Harry's hometown,where he knew the cards sold for higher prices.The profits Harry earned from these transactions are called

Some firms practice odd pricing because

Yield management and price discrimination have enabled firms to increase profits and,at the same time

All of the following are disadvantages of cost-plus pricing except

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?