Question 1

When a firm prices its goods below the marginal cost to drive away competitors,it is referred as

Accepted Answer

A) price skimming. 
B) limit pricing. 
C) penetration pricing. 
D) predatory pricing. 
A) price skimming. 
B) limit pricing. 
C) penetration pricing. 
D) predatory pricing. D

Question 2

Why do cartels tend to break up?

Accepted Answer

There are many reasons,but one of the best is that there is an incentive to cheat.While the cartel maximizes joint profits,individual profit could be increased if the firm could sell more at the cartel price.If everyone does that,output increases and the price falls.

Question 3

Revenue maximization occurs when a firm sells at a price

Accepted Answer

A) that is equal to its minimum average variable cost. 
B) where its marginal revenue is equal to its marginal cost. 
C) where its marginal revenue is zero. 
D) None of the above 
A) that is equal to its minimum average variable cost. 
B) where its marginal revenue is equal to its marginal cost. 
C) where its marginal revenue is zero. 
D) None of the above C

Question 4

In the Sunday newspaper,there are usually coupons that you can clip and take to the store to save money on products.Anyone can buy a newspaper,and the value of the coupons easily exceeds the price of the newspaper for most consumers.Is this an example of price discrimination? Explain.

Accepted Answer

Yes,it is.Consumers with more time are l

Question 5

The following are possible examples of price discrimination except

Accepted Answer

A) prices in export markets are lower than for identical products in the domestic market. 
B) senior citizens pay lower fares on public transportation than younger people at the same time. 
C) a product sells at a higher price at location A than at location B,because transportation costs are higher from the factory to A. 
D) subscription prices for a professional journal are higher when bought by a library than when bought by an individual. 
A) prices in export markets are lower than for identical products in the domestic market. 
B) senior citizens pay lower fares on public transportation than younger people at the same time. 
C) a product sells at a higher price at location A than at location B,because transportation costs are higher from the factory to A. 
D) subscription prices for a professional journal are higher when bought by a library than when bought by an individual.

Question 6

Transfer pricing is a method used to

Accepted Answer

A) determine whether a firm should make or buy a component product. 
B) determine the correct value of a product as it moves from one stage of production to another. 
C) minimize a multinational firm's tax liabilities. 
D) All of the above 
A) determine whether a firm should make or buy a component product. 
B) determine the correct value of a product as it moves from one stage of production to another. 
C) minimize a multinational firm's tax liabilities. 
D) All of the above

Question 7

A cartel price will be established at the quantity where

Accepted Answer

A) total cost equals the industry total revenue. 
B) average cost equals the industry revenue. 
C) the sum of the members' marginal costs equals industry marginal revenue. 
D) marginal cost equals industry price. 
A) total cost equals the industry total revenue. 
B) average cost equals the industry revenue. 
C) the sum of the members' marginal costs equals industry marginal revenue. 
D) marginal cost equals industry price.

Question 8

The practice by a monopolist of charging each buyer the highest price he/she is willing to pay is called

Accepted Answer

A) first-degree discrimination. 
B) second-degree discrimination. 
C) third-degree discrimination. 
D) fourth-degree discrimination. 
A) first-degree discrimination. 
B) second-degree discrimination. 
C) third-degree discrimination. 
D) fourth-degree discrimination.

Question 9

A company which charges a lower price than may be indicated by economic analysis to gain a foothold in the market is practicing

Accepted Answer

A) price skimming. 
B) psychological pricing. 
C) penetration pricing. 
D) prestige pricing. 
A) price skimming. 
B) psychological pricing. 
C) penetration pricing. 
D) prestige pricing.

Question 10

The position of a cartel will become weaker if there is ________ excess-capacity among the firms belonging to the cartel.

Accepted Answer

A) minimum 
B) no 
C) zero 
D) high 
A) minimum 
B) no 
C) zero 
D) high

Question 11

A cartel is defined to be

Accepted Answer

A) any oligopolistic industry with fewer than 4 firms. 
B) a form of oligopoly in which firms agree to sell at different prices like in monopolistic competition. 
C) a form of oligopoly in which firms formally agree to establish a common strategy,often a common price,in effect acting like a monopoly. 
D) a form of oligopoly in which firms agree to compete with each other on an equal basis. 
A) any oligopolistic industry with fewer than 4 firms. 
B) a form of oligopoly in which firms agree to sell at different prices like in monopolistic competition. 
C) a form of oligopoly in which firms formally agree to establish a common strategy,often a common price,in effect acting like a monopoly. 
D) a form of oligopoly in which firms agree to compete with each other on an equal basis.

Question 12

Superstar actors typically get contracts that specify that they get a percentage of "the gross," the total revenues that the movie brings in.Why might actors want contracts structured that way? Why might producers be willing to agree to that,and how does this make the goals of actors and producers different?

Accepted Answer

Actors want to maximize revenue with thi

Question 13

McDonald's charges a higher price for a Big Mac in New York City than it does in a small town in Iowa.Is this an example of third-degree price discrimination? Explain.

Accepted Answer

No,or not necessarily.Costs di

Question 14

The correct expression for cost plus pricing is

Accepted Answer

A) Price = Cost (1 + profit margin). 
B) Price = Cost + profit margin. 
C) Price = Cost (1 + mark-up). 
D) Price = Cost + (1 + mark-up). 
A) Price = Cost (1 + profit margin). 
B) Price = Cost + profit margin. 
C) Price = Cost (1 + mark-up). 
D) Price = Cost + (1 + mark-up).

Question 15

If a product which costs $8 is sold at $10,the profit margin is

Accepted Answer

A) $2. 
B) 25%. 
C) 20%. 
D) None of the above 
A) $2. 
B) 25%. 
C) 20%. 
D) None of the above

Question 16

In order for price discrimination to exist

Accepted Answer

A) markets must be capable of being separated. 
B) markets must be interdependent. 
C) different demand price elasticities must exist in different markets. 
D) demand price elasticities must be identical in all markets. 
E) Both A and C 
A) markets must be capable of being separated. 
B) markets must be interdependent. 
C) different demand price elasticities must exist in different markets. 
D) demand price elasticities must be identical in all markets. 
E) Both A and C

Question 17

In the Baumol model,a change in fixed costs will

Accepted Answer

A) increase total quantity sold. 
B) have no effect on total quantity sold. 
C) decrease total quantity sold. 
D) have an effect on total quantity sold. 
A) increase total quantity sold. 
B) have no effect on total quantity sold. 
C) decrease total quantity sold. 
D) have an effect on total quantity sold.

Question 18

Describe the circumstances under which a producer of joint products in fixed proportions might not sell all of one of the available joint products at the profit-maximizing level of operations.

Accepted Answer

At the profit-maximizing level of output

Question 19

By far,the most frequently encountered price discrimination is the

Accepted Answer

A) first-degree price discrimination. 
B) second-degree price discrimination. 
C) third-degree price discrimination. 
D) fourth-degree price discrimination. 
A) first-degree price discrimination. 
B) second-degree price discrimination. 
C) third-degree price discrimination. 
D) fourth-degree price discrimination.

Question 20

A firm uses ________ for goods which the consumer takes pride in owning.

Accepted Answer

A) price skimming 
B) prestige pricing 
C) penetration pricing 
D) predatory pricing 
A) price skimming 
B) prestige pricing 
C) penetration pricing 
D) predatory pricing

When a firm prices its goods below the marginal cost to drive away competitors,it is referred as

Why do cartels tend to break up?

Revenue maximization occurs when a firm sells at a price

In the Sunday newspaper,there are usually coupons that you can clip and take to the store to save money on products.Anyone can buy a newspaper,and the value of the coupons easily exceeds the price of the newspaper for most consumers.Is this an example of price discrimination? Explain.

The following are possible examples of price discrimination except

Transfer pricing is a method used to

A cartel price will be established at the quantity where

The practice by a monopolist of charging each buyer the highest price he/she is willing to pay is called

A company which charges a lower price than may be indicated by economic analysis to gain a foothold in the market is practicing

The position of a cartel will become weaker if there is ________ excess-capacity among the firms belonging to the cartel.

A cartel is defined to be

McDonald's charges a higher price for a Big Mac in New York City than it does in a small town in Iowa.Is this an example of third-degree price discrimination? Explain.

The correct expression for cost plus pricing is

If a product which costs $8 is sold at $10,the profit margin is

In order for price discrimination to exist

In the Baumol model,a change in fixed costs will

Describe the circumstances under which a producer of joint products in fixed proportions might not sell all of one of the available joint products at the profit-maximizing level of operations.

By far,the most frequently encountered price discrimination is the

A firm uses ________ for goods which the consumer takes pride in owning.

Introduction

The Firm and Its Goals

Supply and Demand

Demand Elasticity

Demand Estimation and Forecasting Appendices 5A and 5B

The Theory and Estimation of Production Appendices 6A,6B,and 6C

The Theory and Estimation of Cost Appendices 7A,7B,and 7C

Pricing and Output Decisions: Perfect Competition and Monopoly Appendices 8A and 8B

Pricing and Output Decisions: Monopolistic Competition and Oligopoly

Game Theory and Asymmetric Information

Capital Budgeting and Risk

The Multinational Corporation in a Global Setting

Government and Industry: Challenges and Opportunities for Todays Manager

The Global Soft Drink Industry

Filters

Exam 10: Special Pricing Practices

When a firm prices its goods below the marginal cost to drive away competitors,it is referred as

Why do cartels tend to break up?

Revenue maximization occurs when a firm sells at a price

In the Sunday newspaper,there are usually coupons that you can clip and take to the store to save money on products.Anyone can buy a newspaper,and the value of the coupons easily exceeds the price of the newspaper for most consumers.Is this an example of price discrimination? Explain.

The following are possible examples of price discrimination except

Transfer pricing is a method used to

A cartel price will be established at the quantity where

The practice by a monopolist of charging each buyer the highest price he/she is willing to pay is called

A company which charges a lower price than may be indicated by economic analysis to gain a foothold in the market is practicing

The position of a cartel will become weaker if there is ________ excess-capacity among the firms belonging to the cartel.

A cartel is defined to be

McDonald's charges a higher price for a Big Mac in New York City than it does in a small town in Iowa.Is this an example of third-degree price discrimination? Explain.

The correct expression for cost plus pricing is

If a product which costs $8 is sold at $10,the profit margin is

In order for price discrimination to exist

In the Baumol model,a change in fixed costs will

Describe the circumstances under which a producer of joint products in fixed proportions might not sell all of one of the available joint products at the profit-maximizing level of operations.

By far,the most frequently encountered price discrimination is the

A firm uses ________ for goods which the consumer takes pride in owning.

Introduction

The Firm and Its Goals

Supply and Demand

Demand Elasticity

Demand Estimation and Forecasting Appendices 5A and 5B

The Theory and Estimation of Production Appendices 6A,6B,and 6C

The Theory and Estimation of Cost Appendices 7A,7B,and 7C

Pricing and Output Decisions: Perfect Competition and Monopoly Appendices 8A and 8B

Pricing and Output Decisions: Monopolistic Competition and Oligopoly

Game Theory and Asymmetric Information

Capital Budgeting and Risk

The Multinational Corporation in a Global Setting

Government and Industry: Challenges and Opportunities for Todays Manager

The Global Soft Drink Industry

Filters