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QUESTION 1 St Lucia bakery is famous for its bread rolls. It sells each bread roll for 50 cents, or 12 bread rolls for $5. Currently they are able to produce 500 bread rolls a day and sell them all within 3 hours of opening 1. The bakery is using second degree price discrimination since the price per bread roll is different when purchasing just a single roll compared to buying 12 at a time. 2. The bakery is not using first degree price discrimination when selling single bread rolls as all customers pay exactly the same price of 50c. 3. By using price discrimination, the bakery is able to convert consumer surplus into producer surplus. Which of the above statements are true: O Only 1 is true. O Only 2 is true. Both 1 and 2 are true. Both 2 and 3 are true. All three are true.QUESTION 4 Tina and Nick run the advertising campaigns of the University of Queensland and the Queensland University of Technology respectively. The two are attempting to determine how much money they should spend on advertising their university in order to secure prospective undergraduate students. Both know that how much they spend will be influenced by how much the other decides to spend, as their advertising will become more or less effective as the other spends a smaller or larger figure, respectively. They can either spend a Large, Medium or Small amount on advertising and the positive payoff from this spending is shown in the table. What is the economic term that best describes this type of game? (Type PD for Prisoner's Dilemma or DS for Dominated Strategy). Nick Large Budget Medium Small Budget (LB) Budget (MB) (SB) Large Budget 25, 25 60, 20 100, 10 (LB) Tina Medium 20, 60 50, 50 60, 20 Budget (MB) Small Budget 10, 100 20, 60 35, 35 (SB)QUESTION 5 Netflix, Hulu and Amazon Prime are three streaming services that all offer a range of movies and TV shows. Together these three products dominate the online streaming market. Answer the following questions: a. In 2015 Netflix distributed its original show "Bojack Horseman", whilst Amazon Prime distributed "Transparent" and Hulu distributed "Deadbeat." Can these TV shows be considered to be slightly differentiated products"? Type Y for Yes or N for No. b. Amazon and Netflix are bidding for the rights to a new TV Show called "Jimmy's Lectures." However, there are also other shows for which the two services wish to bid and as a result, they are trying to establish their bidding budget for the next year. Both realise that how much they spend on bidding depends on how much the other spends on bidding. Based on the payoff matrix below, what strategy will Amazon (the left player) adopt? Netflix is the top player. Type SB for Small Budget, MB for Medium Budget or LB for Large Budget. Small Budget (SB) Medium Budget (MB) Large Budget (LB) Small Budget (SB) 25, 25 10, 40 3, 55 Medium Budget (MB) 40, 10 20, 20 8, 35 Large Budget (LB) 55, 3 35, 8 15, 15 c. In the event where Amazon and Netflix decided to bid for completely different shows over the next year, would the payoff matrix be useful? Type Y for Yes or N for No.QUESTION 2 Translink is the operator of Brisbane's public transport network. Every morning approximately 70,000 people catch a Translink bus. These trips occur mainly in "peak hour," between 7am and 9am. To pay for the bus, customers can either purchase a paper ticket or utilise an electronic "Go Card." Fares when using Go Cards are approximately 35% cheaper than purchasing a paper ticket. Which of the following statements are true: Translink is price discriminating between paper tickets and Go Card fares. Translink is using first degree price discrimination between paper tickets and Go Card fares. The decision to price discriminate will not allow translink to capture more consumer surplus. Translink should not price discriminate as it does not have pricing power. QUESTION 3 Apple Music is a music streaming service provided by Apple that aims to compete with Spotify. It charges $11.99 per month for a single user subscription, or $17.99 for a family package that can be used by up to 6 people. Select the item from the list provided to make the following statements true. Apple Music is employing in offering a family 1. First degree price discrimination package. 2. Second degree price discrimination 3. Third degree price discrimination If raising its prices will never lead to greater profits for Apple Music, 4. Peak load pricing this would indicate that it has been forced to adopted a 5. Pricing power strategy 6. Arbitrage If Jack purchases a family package, then sells access to Apple 7. Inefficient Music to Jill, he is engaging in 8. Collusion 9. Dominant 10. Dominated 11. Prisoner's dilemma 12. Efficient
