Filters
Question type
Study Flashcards

If price discrimination occurs in a market


A) the law of one price does not hold.
B) the firm earns arbitrage profits.
C) consumers whose demand for the product sold is more elastic pay higher prices than consumers whose demand is less elastic.
D) the marginal cost of production is constant.

Correct Answer

verifed

verified

With perfect price discrimination,the marginal revenue curve


A) is below the demand curve.
B) is above the demand curve.
C) is equal to the demand curve.
D) is horizontal.

Correct Answer

verifed

verified

Figure 16-5 Figure 16-5 -Refer to Figure 16-5.Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price.(This is also called an optimal two-part tariff.) What is the per-unit price it should charge,if any? A) It should not charge a price per unit; just a flat fee to consume as much of the product as desired. B) It should charge a range of prices from $40 to $12. C) $12 D) $16 -Refer to Figure 16-5.Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price.(This is also called an optimal two-part tariff.) What is the per-unit price it should charge,if any?


A) It should not charge a price per unit; just a flat fee to consume as much of the product as desired.
B) It should charge a range of prices from $40 to $12.
C) $12
D) $16

Correct Answer

verifed

verified

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.

Correct Answer

verifed

verified

Figure 16-2 Figure 16-2 Plato Playhouse, a theatre company in the university town of Wegg, caters to two groups of customers: students and the non-student population. Figure 16-2 shows the demand curves for the two groups of customers. -Refer to Figure 16-2.What is the price charged in the two markets? A) price in the student market = price in the non-student market = P<sub>a</sub> B) price in the student market = price in the non-student market = P<sub>b</sub> C) price in the student market = P<sub>d;</sub><sub> </sub>price in the non-student market = P<sub>e</sub> D) price in the student market = P<sub>c;</sub><sub> </sub>price in the non-student market = P<sub>e</sub> Plato Playhouse, a theatre company in the university town of Wegg, caters to two groups of customers: students and the non-student population. Figure 16-2 shows the demand curves for the two groups of customers. -Refer to Figure 16-2.What is the price charged in the two markets?


A) price in the student market = price in the non-student market = Pa
B) price in the student market = price in the non-student market = Pb
C) price in the student market = Pd; price in the non-student market = Pe
D) price in the student market = Pc; price in the non-student market = Pe

Correct Answer

verifed

verified

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


A) A firm that makes one product.
B) A firm that sells one product and has a sizable research and development budget.
C) A firm that makes several products and has a sizable research and development budget, the cost of which cannot be easily assigned to each product.
D) A firm that makes many products but has a small research and development budget, the cost of which can be easily assigned to the different product lines.

Correct Answer

verifed

verified

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


A) odd pricing.
B) arbitrage.
C) an antitrust prohibited practice.
D) price discrimination.

Correct Answer

verifed

verified

Cost-plus pricing may be a reasonable way to determine price when


A) marginal cost and average fixed cost are roughly equal.
B) marginal cost and average cost are about the same.
C) marginal cost differs significantly from average cost.
D) marginal cost is very low.

Correct Answer

verifed

verified

The Walt Disney Company is in a position to use a two-part tariff by charging for admission and also charging for rides inside its two theme parks,Disneyland and Disney World.Which of the following statements regarding Disney's pricing strategy is true?


A) At one time, admission fees were charged at both parks but all rides were free. Disney has since changed its pricing policy; it earns higher profits by charging for both admission and rides.
B) At one time, customers had to pay for admission and rides at Disneyland and Disney World. Disney has since changed its pricing policy; it earns higher profits by charging for admission but not for rides.
C) At one time, customers had to pay for admission and rides at Disneyland and Disney World. Disney has since changed its pricing policy; it earns higher profits by charging for rides but not for admission.
D) At one time, fees for admission and rides at both parks were set at their profit-maximizing levels. Disney has since changed its pricing policy; it uses a cost-plus pricing strategy for admission and does not charge for rides.

Correct Answer

verifed

verified

Cost-price pricing typically does not result in profit-maximization.As a result,economists have two views of cost-plus pricing.One of these views is


A) cost-plus pricing is more likely to lead to profit-maximization for large firms than for small firms.
B) cost-plus pricing is a good way to approximate the profit-maximizing price when marginal revenue or marginal cost is difficult to determine.
C) cost-plus pricing is more likely to lead to profit-maximization for monopolistically competitive firms than for oligopoly firms.
D) cost-plus pricing is more likely to result in profit-maximization the more elastic the firm's demand curve is.

Correct Answer

verifed

verified

Transactions costs refer to


A) the implicit costs of production.
B) the costs in time and other resources that parties incur in the process of agreeing to and carrying out an exchange of goods or services.
C) the raw material cost of production.
D) the cost of transporting goods from one destination to another.

Correct Answer

verifed

verified

Perfect price discrimination will lead a firm to produce up to the point where price equals marginal cost,the efficient level of output.

Correct Answer

verifed

verified

Figure 16-1 Figure 16-1 -Refer to Figure 16-1.What is the economically efficient output level? A) Q<sub>1</sub> units B) Q<sub>2</sub> units C) Q<sub>3</sub> units D) Q<sub>4</sub> units -Refer to Figure 16-1.What is the economically efficient output level?


A) Q1 units
B) Q2 units
C) Q3 units
D) Q4 units

Correct Answer

verifed

verified

Price discrimination is a rational strategy for a profit-maximizing firm when


A) it is possible to engage in arbitrage across market segments.
B) it is not possible to segment consumers into identifiable markets.
C) there is no opportunity for arbitrage across market segments.
D) firms want to increase the amount of consumer surplus received by its customers.

Correct Answer

verifed

verified

Table 16-2 Table 16-2 Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 16-2. The average cost of production is constant at $2 per tube. -Refer to Table 16-2.What is the total revenue received from both markets combined? A) $30 B) $34 C) $68 D) $70 Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 16-2. The average cost of production is constant at $2 per tube. -Refer to Table 16-2.What is the total revenue received from both markets combined?


A) $30
B) $34
C) $68
D) $70

Correct Answer

verifed

verified

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


A) large firms do not have to maximize their profits because they face little competition from other firms.
B) there is less risk of violating antitrust laws if a cost-plus pricing strategy is used rather than a profit-maximizing pricing strategy.
C) the additional revenue that would result from a profit-maximizing pricing strategy is an insignificant fraction of the firms' revenues.
D) firms often adjust the markup they charge to reflect current demand.

Correct Answer

verifed

verified

Many colleges and universities practice yield management to maximize the revenue they receive from tuition and


A) to maximize the amount of aid they receive from the federal government.
B) to maximize the amount of their student loans.
C) to maximize the size of their endowments.
D) to increase the academic quality of the students who enroll in their schools.

Correct Answer

verifed

verified

Figure 16-5 Figure 16-5 -Refer to Figure 16-5.Suppose the firm represented in the diagram decides to act as a monopolist and charge a single price.What is the profit maximizing quantity produced and what is the price charged? A) Q = 240 units; P = $28 B) Q = 320 units; P = $24 C) Q = 480 units; P = $16 D) Q = 560 units; P = $12 -Refer to Figure 16-5.Suppose the firm represented in the diagram decides to act as a monopolist and charge a single price.What is the profit maximizing quantity produced and what is the price charged?


A) Q = 240 units; P = $28
B) Q = 320 units; P = $24
C) Q = 480 units; P = $16
D) Q = 560 units; P = $12

Correct Answer

verifed

verified

Table 16-2 Table 16-2 Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 16-2. The average cost of production is constant at $2 per tube. -Refer to Table 16-2.What are the total profits from both markets combined? A) $50 B) $48 C) $18 D) $15 Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 16-2. The average cost of production is constant at $2 per tube. -Refer to Table 16-2.What are the total profits from both markets combined?


A) $50
B) $48
C) $18
D) $15

Correct Answer

verifed

verified

Because each customer pays according to her willingness to pay,a consumer maximizes her consumer surplus under first-degree price discrimination.

Correct Answer

verifed

verified

Showing 161 - 180 of 263

Related Exams

Exam 1

Economics: Foundations and Models

233 Questions

Exam 2

Trade-Offs, comparative Advantage, and the Market System

259 Questions

Exam 3

Where Prices Come From: the Interaction of Demand and Supply

242 Questions

Exam 4

Economic Efficiency, government Price Setting, and Taxes

208 Questions

Exam 5

Externalities, environmental Policy, and Public Goods

267 Questions

Exam 6

Elasticity: The Responsiveness of Demand and Supply

295 Questions

Exam 7

The Economics of Health Care

169 Questions

Exam 8

Firms, the Stock Market, and Corporate Governance

278 Questions

Exam 9

Comparative Advantage and the Gains From International Trade

189 Questions

Exam 10

Consumer Choice and Behavioral Economics

302 Questions

Exam 11

Technology, production, and Costs

330 Questions

Exam 12

Firms in Perfectly Competitive Markets

298 Questions

Exam 13

Monopolistic Competition: the Competitive Model in a More Realistic Setting

278 Questions

Exam 14

Oligopoly: Firms in Less Competitive Markets

262 Questions

Exam 15

Monopoly and Antitrust Policy

271 Questions

Exam 17

The Markets for Labor and Other Factors of Production

286 Questions

Exam 18

Public Choice,taxes,and the Distribution of Income

258 Questions

Show Answer