Question 1

The per-week demand for use of the Golden Gate Bridge in San Francisco is P = 13 - 0.15Q during peak traffic periods and P = 7 - 0.1Q during off-peak hours,where Q is the number of cars crossing the bridge in thousands and P is the toll in dollars.If the marginal congestion cost of using the bridge is MC = 5 + 0.2Q,what is the optimal off-peak load toll for crossing the bridge?

Accepted Answer

A)   6.5.
B)   8.0.
C)   8.7.
D)   9.9.
E)   10.6. A

Question 2

The optimal level of output and price for the profit-maximizing monopolist in the following figure would be:

Accepted Answer

A)   Q = 30 and P = $35.
B)   Q = 60 and P = $20.
C)   Q = 30 and P = $20.
D)   Q = 100 and P = $35.
E)   none of the above. A

Question 3

The demand for health club services is Q = 350 - 2P and the marginal cost of providing these services is MC = 110 + 2Q.If a two-part tariff pricing system is used,what is the optimal price and quantity combination?

Accepted Answer

A)   P = 52 and Q = 240.
B)   P = 199 and Q = 52.
C)   P = 26 and Q = 162.
D)   P = 162 and Q = 26.
E)   None of the above. D

Question 4

The per-week demand for use of the Golden Gate Bridge in San Francisco is P = 13 - 0.15Q during peak traffic periods and P = 10 - 0.1Q during off-peak hours,where Q is the number of cars crossing the bridge in thousands and P is the toll in dollars.If the marginal congestion cost of using the bridge is MC = 5 + 0.2Q,what is the optimal peak load toll for crossing the bridge?

Accepted Answer

A)   6.5.
B)   8.0.
C)   8.7.
D)   9.9.
E)   10.5.

Question 5

When a utility charges homeowners less than big industrial users,it is practicing:

Accepted Answer

A)   first-degree price discrimination.
B)   fourth-degree price discrimination.
C)   third-degree price discrimination.
D)   markup pricing.
E)   tying.

Question 6

A firm with production located in a poor Georgia town sells toys locally for $10 each and ships the same toys to sell in a wealthy North Carolina town for $15 each.They are not price discriminating if:

Accepted Answer

A)   laws in Georgia allow it.
B)   laws in North Carolina allow it.
C)   total advertising costs are $5 per unit.
D)   total transportation costs are $5 per unit.
E)   consumers in North Carolina would pay more than $15 for the toys.

Question 7

Gliberace's Fashion Accessories of Las Vegas produces gemstone-encrusted formal wear for sale in Los Angeles and San Francisco subject to total cost TC = 100 + 5(QLA + QSF).Demand for Gliberace's stones in the two cities is given by QLA = 70 - 2PLA and QSF = 55 - PSF .If Gliberace price discriminates between the two cities,how many stones will it sell in Los Angeles?

Accepted Answer

A)   30.
B)   36.
C)   38.
D)   43.
E)   48.

Question 8

The per-week demand for use of the Golden Gate Bridge in San Francisco is P = 12 - 0.15Q during peak traffic periods and P = 9 - 0.1Q during off-peak hours,where Q is the number of cars crossing the bridge in thousands and P is the toll in dollars.If the marginal congestion cost of using the bridge is MC = 5 + 0.2Q,what is the optimal peak load toll for crossing the bridge?

Accepted Answer

A)   6.5.
B)   8.0.
C)   8.7.
D)   9.9.
E)   10.6.

Question 9

The per-week demand for use of the Golden Gate Bridge in San Francisco is P = 12 - 0.15Q during peak traffic periods and P = 9 - 0.1Q during off-peak hours,where Q is the number of cars crossing the bridge in thousands and P is the toll in dollars.If the marginal congestion cost of using the bridge is MC = 5 + 0.2Q,what is the optimal off-peak load toll for crossing the bridge?

Accepted Answer

A)   6.5.
B)   8.0.
C)   8.7.
D)   9.9.
E)   10.6.

Question 10

If the monopolist shown in the following figure could implement a two-part tariff,the entry fee would be:

Accepted Answer

A)   $0.
B)   $225.
C)   $450.
D)   $900.
E)   $1,200.

Question 11

When Exxoff Oil Corporation offers discounts based on credit card records of gas quantities purchased,they are practicing:

Accepted Answer

A)   first-degree price discrimination.
B)   second-degree price discrimination.
C)   third-degree price discrimination.
D)   markup pricing.
E)   tying.

Question 12

Gliberace's Fashion Accessories of Las Vegas produces gemstone-encrusted formal wear for sale in Los Angeles and San Francisco subject to total cost TC = 100 + 5(QLA + QSF).Demand for Gliberace's stones in the two cities is given by QLA = 70 - 2PLA and QSF = 55 - PSF.If Gliberace price discriminates between the two cities,what will its maximum profits be?

Accepted Answer

A)   $750.
B)   $825.
C)   $1,075.
D)   $975.
E)   $1,175.

Question 13

The demand for health club services is Q = 100 - 2P,and the marginal cost of providing these services is MC = -110 + 2Q.If a two-part tariff pricing system is used,what is the optimal price and quantity combination?

Accepted Answer

A)   P = 18 and Q = 64.
B)   P = 199 and Q = 52.
C)   P = 26 and Q = 162.
D)   P = 162 and Q = 26.
E)   None of the above.

Question 14

Price discrimination is defined as:

Accepted Answer

A)   selling a product at the same price to each and every consumer.
B)   selling a product at more than one price.
C)   selling a product at its marginal cost plus a markup.
D)   selling more than one version of a product.
E)   producing goods and services for sale within the firm.

Question 15

Gliberace's Fashion Accessories of Las Vegas produces gemstone-encrusted formal wear for sale in Los Angeles and San Francisco subject to total cost TC = 100 + 6(QLA + QSF).Demand for Gliberace's stones in the two cities is given by QLA = 70 - 2PLA and QSF = 50 - PSF.If Gliberace cannot price discriminate between the two cities,and so charges the same price in each,how many stones will it sell in Los Angeles?

Accepted Answer

A)   12.
B)   15.
C)   18.
D)   21.
E)   24.

Question 16

Women are often charged more than men for haircuts performed by the same haircutter.This is not considered price discrimination because:

Accepted Answer

A)   women receive more consumer surplus from haircuts than men receive.
B)   haircutters claim to spend more time on women's hair, raising the cost of the haircut to the firm.
C)   firms make up the extra cost to consumers by giving women free samples of products.
D)   men receive more consumer surplus from haircuts than women receive.
E)   women have a lower price elasticity of demand for haircuts.

Question 17

If a firm supplies separable markets with price elasticities $\eta$1 and $\eta$2,it should set prices P1 and P2 so that:

Accepted Answer

A)   P1 η\etaη 1 = P2 η\etaη 2.
B)   P1 / η\etaη 1 = P2 / η\etaη 2.
C)   P1(1 + 1/ η\etaη 1)  = P2 (1 + 1/ η\etaη 2) .
D)   P1/(1 - 1 / η\etaη 1)  = P2 / (1 - 1/ η\etaη 2) .
E)   P1 = 1 - 1/ η\etaη 1 and P2 = 1 - 1/ η\etaη 2.

Question 18

When Pan United Airlines gives a $400 fare discount to persons with student IDs,they are practicing:

Accepted Answer

A)   first-degree price discrimination.
B)   second-degree price discrimination.
C)   third-degree price discrimination.
D)   markup pricing.
E)   tying.

Question 19

Cereal manufacturers' use of coupons can be partially explained by:

Accepted Answer

A)   first-degree price discrimination.
B)   second-degree price discrimination.
C)   third-degree price discrimination.
D)   markup pricing.
E)   tying.

Question 20

If the monopolist shown in the following figure could practice first-degree price discrimination,the producer surplus would be:

Accepted Answer

A)   $0.
B)   $225.
C)   $450.
D)   $900.
E)   $1,200.

Exam 9: Managerial Use of Price Discrimination

The optimal level of output and price for the profit-maximizing monopolist in the following figure would be:

The demand for health club services is Q = 350 - 2P and the marginal cost of providing these services is MC = 110 + 2Q.If a two-part tariff pricing system is used,what is the optimal price and quantity combination?

When a utility charges homeowners less than big industrial users,it is practicing:

A firm with production located in a poor Georgia town sells toys locally for $10 each and ships the same toys to sell in a wealthy North Carolina town for $15 each.They are not price discriminating if:

If the monopolist shown in the following figure could implement a two-part tariff,the entry fee would be:

When Exxoff Oil Corporation offers discounts based on credit card records of gas quantities purchased,they are practicing:

The demand for health club services is Q = 100 - 2P,and the marginal cost of providing these services is MC = -110 + 2Q.If a two-part tariff pricing system is used,what is the optimal price and quantity combination?

Price discrimination is defined as:

Women are often charged more than men for haircuts performed by the same haircutter.This is not considered price discrimination because:

If a firm supplies separable markets with price elasticities $\eta$ ₁ and $\eta$ ₂,it should set prices P₁ and P₂ so that:

When Pan United Airlines gives a $400 fare discount to persons with student IDs,they are practicing:

Cereal manufacturers' use of coupons can be partially explained by:

If the monopolist shown in the following figure could practice first-degree price discrimination,the producer surplus would be:

Exam 9: Managerial Use of Price Discrimination

The optimal level of output and price for the profit-maximizing monopolist in the following figure would be:

The demand for health club services is Q = 350 - 2P and the marginal cost of providing these services is MC = 110 + 2Q.If a two-part tariff pricing system is used,what is the optimal price and quantity combination?

When a utility charges homeowners less than big industrial users,it is practicing:

A firm with production located in a poor Georgia town sells toys locally for $10 each and ships the same toys to sell in a wealthy North Carolina town for $15 each.They are not price discriminating if:

If the monopolist shown in the following figure could implement a two-part tariff,the entry fee would be:

When Exxoff Oil Corporation offers discounts based on credit card records of gas quantities purchased,they are practicing:

The demand for health club services is Q = 100 - 2P,and the marginal cost of providing these services is MC = -110 + 2Q.If a two-part tariff pricing system is used,what is the optimal price and quantity combination?

Price discrimination is defined as:

Women are often charged more than men for haircuts performed by the same haircutter.This is not considered price discrimination because:

If a firm supplies separable markets with price elasticities η\etaη 1 and η\etaη 2,it should set prices P1 and P2 so that:

When Pan United Airlines gives a $400 fare discount to persons with student IDs,they are practicing:

Cereal manufacturers' use of coupons can be partially explained by:

If the monopolist shown in the following figure could practice first-degree price discrimination,the producer surplus would be:

If a firm supplies separable markets with price elasticities $\eta$ ₁ and $\eta$ ₂,it should set prices P₁ and P₂ so that: