Question 1

Tying is:

Accepted Answer

A)   the practice of selling complement goods together.
B)   a way for firms to lower costs.
C)   a type of price discrimination.
D)   typically easy to spot.E) All of the above
F) B) and C)

Question 2

Price discrimination is defined as selling:

Accepted Answer

A)   the same products at the same prices to the same customers.
B)   different products at the different prices to the same customers.
C)   the same product at different prices to different customers.
D)   different products at the same prices to different customers.E) A) and B)
F) B) and C)

Question 3

Bundling is most likely to be beneficial when fixed costs are ______ and marginal costs are ______.

Accepted Answer

A)   high; high
B)   high; low
C)   low; high
D)   low; lowE) None of the above
F) A) and C)

Question 4

Cable television operators sell ______ access to channels.

Accepted Answer

A)   tied
B)   bundled
C)   aggregated
D)   separatedE) B) and D)
F) All of the above

Question 5

A perfect price-discriminating seller:

Accepted Answer

A)   cannot prevent arbitrage.
B)   charges a single price.
C)   maximizes consumer surplus.
D)   eliminates deadweight loss.E) All of the above
F) A) and B)

Question 6

If arbitrage becomes extensive, a price-discriminating monopolist selling its patented drug in two markets will:

Accepted Answer

A)   quit selling the product in the market with the inelastic demand.
B)   begin to charge the same price in both markets.
C)   increase the price in the inelastic market and lower the price in the elastic market.
D)   raise the price in both markets.E) B) and C)
F) None of the above

Question 7

A perfectly price-discriminating monopolist charges consumers the average of their maximum willingness to pay.

Accepted Answer

A) True 
 B)False

Question 8

To maximize profits, the monopolist should set a higher price in a market with ______ demand.

Accepted Answer

A)   more elastic
B)   unit elastic
C)   more inelastic
D)   weakerE) A) and B)
F) None of the above

Question 9

Use the following to answer questions: Figure: Monopolist U between the two markets, in which range would the price fall? A)  $5 U U U U 
-(Figure: Monopolist)  Refer to the figure. Based on the demand curves for a monopolist's product in two different markets-Market A and Market B-if the monopolist were to charge a uniform price PU between the two markets, in which range would the price fall?

Accepted Answer

A)   $5 U 
B)   $5 U 
C)   $9 U 
D)   $7 U < $10E) B) and C)
F) C) and D)

Question 10

Karl values Word at $100 and Excel at $40, and Adam values Word at $20 and Excel at $90. If the programs are sold separately, what are the profit-maximizing prices?

Accepted Answer

A)   $20 for Word; $40 for Excel
B)   $20 for Word; $90 for Excel
C)   $100 for Word; $40 for Excel
D)   $100 for Word; $90 for ExcelE) A) and C)
F) All of the above

Question 11

How does price discrimination increase social surplus?

Accepted Answer

A)   It distributes deadweight loss over many different groups.
B)   It lowers prices for certain groups.
C)   It expands the output that a firm would otherwise produce.
D)   It doesn't increase social surplus.E) B) and D)
F) A) and C)

Question 12

Bundling and tying are:

Accepted Answer

A)   essentially the same practices.
B)   different forms of price discrimination.
C)   often done at the same time.
D)   considered illegal in many countries.E) B) and C)
F) All of the above

Question 13

Bundling is sometimes a form of price discrimination, but not necessarily always a form of price discrimination.

Accepted Answer

A) True 
 B)False

Question 14

Under perfect price discrimination, there is never any deadweight loss.

Accepted Answer

A) True 
 B)False

Question 15

Many restaurants offer early bird specials to those individuals who come in before 6 P.M. to eat dinner. Explain why restaurants choose to give discounts to those people who come in early to eat. What types of people would you expect to see at the early bird specials? What kind of demand would you suspect they have for dining out?

Accepted Answer

Restaurants choose to offer the early bi...

Question 16

For price discrimination to work, the young should ________ than/to the old.

Accepted Answer

A)   be charged less for a product
B)   be charged more for a product
C)   sometimes be charged more and sometimes charged less
D)   be charged a price equal to the marginal costE) A) and C)
F) All of the above

Question 17

Use the following to answer questions: Figure: PPD 
-(Figure: PPD)  Refer to the figure. Which of the following statements best explains why a firm that perfectly price discriminates would sell additional units beyond c units of output?

Accepted Answer

A)   If the firm can perfectly price discriminate it can charge a price equal to the consumers' willingness to pay, which for all units beyond c is higher than the firm's marginal cost for those units.
B)   The firm will continue to increase profits as long as consumers' willingness to pay is greater than zero.
C)   A firm will not sell beyond c units of output. The marginal cost is greater than consumers' willingness to pay for these units.
D)   A firm will not sell beyond c units of output. The marginal cost is greater than the firm's marginal revenue for these units.E) A) and B)
F) All of the above

Question 18

The textbook for your economics class is available in an American version and in a much cheaper Indian version that has the same text but no colors for the graphs (the difference in prices is much higher than the difference in costs) . Why is this the case?

Accepted Answer

A)   Demand in the United States is much more inelastic than demand in India.
B)   Demand in the United States is much more elastic than demand in India.
C)   No one in India has any use for color graphs.
D)   There are more substitutes for your textbook in the United States.E) A) and D)
F) C) and D)

Question 19

One example of price discrimination occurs in the publishing industry when a publisher initially releases an expensive hardcover edition of a popular novel, and later releases a cheaper paperback edition. Use this example to demonstrate both the benefits as well as the potential pitfalls of a price discrimination pricing strategy.

Accepted Answer

The answer should address the three basi...

Question 20

Arbitrage is ________ in one market and ________ in another market.

Accepted Answer

A)   selling low; buying higher
B)   selling high; buying higher
C)   buying high; selling lower
D)   buying low; selling higherE) A) and C)
F) None of the above

Exam 14: Price Discrimination

A perfect price-discriminating seller:

Correct Answer
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Cable television operators sell ______ access to channels.

Correct Answer
verified

Correct Answer
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Arbitrage is in one market and in another market.

Correct Answer
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Use the following to answer questions: Figure: PPD -(Figure: PPD) Refer to the figure. Which of the following statements best explains why a firm that perfectly price discriminates would sell additional units beyond c units of output?

Correct Answer
verified

Karl values Word at $100 and Excel at $40, and Adam values Word at $20 and Excel at $90. If the programs are sold separately, what are the profit-maximizing prices?

Correct Answer
verified

A perfectly price-discriminating monopolist charges consumers the average of their maximum willingness to pay.

Correct Answer
verified

To maximize profits, the monopolist should set a higher price in a market with ______ demand.

Correct Answer
verified

The textbook for your economics class is available in an American version and in a much cheaper Indian version that has the same text but no colors for the graphs (the difference in prices is much higher than the difference in costs) . Why is this the case?

Correct Answer
verified

Under perfect price discrimination, there is never any deadweight loss.

Correct Answer
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Tying is:

Correct Answer
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Bundling and tying are:

Correct Answer
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How does price discrimination increase social surplus?

Correct Answer
verified

Correct Answer
verified
Restaurants choose to offer the early bi...
View Answer

Bundling is sometimes a form of price discrimination, but not necessarily always a form of price discrimination.

Correct Answer
verified

Bundling is most likely to be beneficial when fixed costs are and marginal costs are .

Correct Answer
verified

For price discrimination to work, the young should ________ than/to the old.

Correct Answer
verified

Price discrimination is defined as selling:

Correct Answer
verified

Correct Answer
verified
The answer should address the three basi...
View Answer

If arbitrage becomes extensive, a price-discriminating monopolist selling its patented drug in two markets will:

Correct Answer
verified

Exam 14: Price Discrimination

A perfect price-discriminating seller:

Correct AnswerverifiedShow Answer

Cable television operators sell ______ access to channels.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Arbitrage is ________ in one market and ________ in another market.

Correct AnswerverifiedShow Answer

Use the following to answer questions: Figure: PPD -(Figure: PPD) Refer to the figure. Which of the following statements best explains why a firm that perfectly price discriminates would sell additional units beyond c units of output?

Correct AnswerverifiedShow Answer

Karl values Word at $100 and Excel at $40, and Adam values Word at $20 and Excel at $90. If the programs are sold separately, what are the profit-maximizing prices?

Correct AnswerverifiedShow Answer

A perfectly price-discriminating monopolist charges consumers the average of their maximum willingness to pay.

Correct AnswerverifiedShow Answer

To maximize profits, the monopolist should set a higher price in a market with ______ demand.

Correct AnswerverifiedShow Answer

The textbook for your economics class is available in an American version and in a much cheaper Indian version that has the same text but no colors for the graphs (the difference in prices is much higher than the difference in costs) . Why is this the case?

Correct AnswerverifiedShow Answer

Under perfect price discrimination, there is never any deadweight loss.

Correct AnswerverifiedShow Answer

Tying is:

Correct AnswerverifiedShow Answer

Bundling and tying are:

Correct AnswerverifiedShow Answer

How does price discrimination increase social surplus?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedRestaurants choose to offer the early bi...View AnswerShow Answer

Bundling is sometimes a form of price discrimination, but not necessarily always a form of price discrimination.

Correct AnswerverifiedShow Answer

Bundling is most likely to be beneficial when fixed costs are ______ and marginal costs are ______.

Correct AnswerverifiedShow Answer

For price discrimination to work, the young should ________ than/to the old.

Correct AnswerverifiedShow Answer

Price discrimination is defined as selling:

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe answer should address the three basi...View AnswerShow Answer

If arbitrage becomes extensive, a price-discriminating monopolist selling its patented drug in two markets will:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Arbitrage is in one market and in another market.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Restaurants choose to offer the early bi...
View Answer

Correct Answer
verified

Bundling is most likely to be beneficial when fixed costs are and marginal costs are .

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
verified
The answer should address the three basi...
View Answer

Correct Answer
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