Question 1(1 point)

The maximum price that a consumer is willing to pay for each unit bought is the ________ price.

Question 1 options:

reservation

consumer surplus

auction

choke

market

Question 2(1 point)

Second-degree price discrimination is the practice of charging

Question 2 options:

each customer the maximum price that he or she is willing to pay.

the reservation price to each customer.

different groups of customers different prices for the same products.

different prices for different blocks of the same good or service.

Question 3(1 point)

Third-degree price discrimination involves

Question 3 options:

charging each consumer the same two part tariff.

the use of increasing block rate pricing.

charging lower prices the greater the quantity purchased.

charging different prices to different groups based upon differences in elasticity of demand.

Question 4(1 point)

McDonald's restaurant located near the high school offered a Tuesday special for high school students. If high school students showed their student ID cards, they would be given 50 cents off any special meal. This practice is an example of:

Question 4 options:

price discrimination.

tying.

two-part tariff.

collusion

bundling

Question 5(1 point)

A third-degree price discriminating monopolist can sell its output either in the local market or on an internet auction site (or both). Having sold all of its output it discovers that the marginal revenue in the local market is $20 while its marginal revenue on the internet auction site is $30. To maximize profits the firm should

Question 5 options:

sell less in both markets until marginal revenue is zero.

have sold more output in the local market and less at the internet auction site.

do nothing until it acquires more information on costs.

have sold less output in the local market and more on the internet auction site.

sell more in both markets until marginal cost is zero.

Question 6(1 point)

Suppose that the marginal cost of an additional ton of steel produced by the Japanese is the same whether the steel is set aside for domestic use or exported abroad. If the price elasticity of demand for steel is greater abroad than it is in Japan, which of the following will be correct?

Question 6 options:

The Japanese will sell steel at a higher price abroad than they will charge domestic users.

The Japanese will sell more steel in Japan than they will sell abroad.

The Japanese will sell more steel abroad than they will sell in Japan.

The Japanese will sell steel at a lower price abroad than they will charge domestic users.

Insufficient information exists to determine whether the price or quantity will be higher or lower abroad.

Question 7(1 point)

For a perfect first-degree price discriminator, incremental revenue is

Question 7 options:

less than the marginal revenue for a non-discriminating monopolist.

greater than price if the demand curve is downward sloping.

equal to the price paid for each unit of output.

the same as the marginal revenue curve if the firm is a non-discriminating monopolist.

Question 8(1 point)

A firm sells an identical product to two groups of consumers, A and B. The firm has decided that third-degree price discrimination is feasible and wishes to set prices that maximize profits. Which of the following best describes the price and output strategy that will maximize profits?

Question 8 options:

MRA=MRB=MC.

MRA=MRB.

MRA=MRB.

PA=PB=MC.

Question 9(1 point)

Under perfect price discrimination, marginal profit at each level of output equal

Question 9 options:

P - MC.

P - AR.

P - AC.

0

Question 10(1 point)

Under perfect price discrimination, consumer surplus

Question 10 options:

equals zero.

is maximized.

is less than zero.

is greater than zero.

Question 16(1 point)

Exhibit 11_5.Execise 5. A monopolist is deciding how to allocate output between two geographically separated markets (East Coast and Midwest). Demand and marginal revenue for the two markets are:

P₁= 15 -Q₁MR₁= 15 - 2Q₁

P₂= 25 - 2Q₂MR₂= 25 - 4Q₂

The monopolist's total cost isC= 5 + 3(Q₁+Q₂). What are price, output, profits, marginal revenues, and deadweight loss (i) if the monopolist can price discriminate? (ii) if the law prohibits charging different prices in the two regions?

Look at exhibit 11.5 Quantities sold in markets 1 and 2 are: ___ and ____:

Question 16 options:

6 and 5

5.5 and 6

7.5 and 6

6 and 5.5

Question 17(1 point)

Exhibit 11_5.Execise 5. A monopolist is deciding how to allocate output between two geographically separated markets (East Coast and Midwest). Demand and marginal revenue for the two markets are:

P₁= 15 -Q₁MR₁= 15 - 2Q₁

P₂= 25 - 2Q₂MR₂= 25 - 4Q₂

The monopolist's total cost isC= 5 + 3(Q₁+Q₂). What are price, output, profits, marginal revenues, and deadweight loss (i) if the monopolist can price discriminate? (ii) if the law prohibits charging different prices in the two regions?

. Look again at exhibit 11.5. Prices in markets 1 and 2 are: ___ and ____:

Question 17 options:

9 and 16

9 and 14

7.5 and 9

14 and 9

Question 18(1 point)

Exhibit 11_5. Execise 5. A monopolist is deciding how to allocate output between two geographically separated markets (East Coast and Midwest). Demand and marginal revenue for the two markets are:

P1 = 15 - Q1 MR1 = 15 - 2Q1

P2 = 25 - 2Q2 MR2 = 25 - 4Q2

The monopolist's total cost is C = 5 + 3(Q1 + Q2 ). What are price, output, profits, marginal revenues, and deadweight loss (i) if the monopolist can price discriminate? (ii) if the law prohibits charging different prices in the two regions?

. Look again at exhibit 11.5. The monopoly's profits from both markets will be ____ and deadweight

social loss due to monopoly will be ____:

Question 18 options:

85 and 50

48 and 91

91.5 and 48.25

97.5 and 48.25

Question 19(1 point)

Exhibit.Chapter 11, Exercise 8

Sal's satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groups are

Q_NY= 60 - 0.25P_NYQ_LA= 100 - 0.50P_LA

whereQis in thousands of subscriptions per year andPis the subscription price per year.

The cost of providingQunits of service is given byC= 1000 + 40QwhereQ=Q_NY+Q_LA.

Look at the above exhibit. With price discrimination, the profit-maximizing prices for the New York and Los Angeles markets are ?

Question 19 options:

120 and 140

140 and 120

126 and 142

40 and 25

Question 20(1 point)

Exhibit.Chapter 11, Exercise 8

Sal's satellite company broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two groups are

Q_NY= 60 - 0.25P_NYQ_LA= 100 - 0.50P_LA

whereQis in thousands of subscriptions per year andPis the subscription price per year.

The cost of providingQunits of service is given byC= 1000 + 40QwhereQ=Q_NY+Q_LA.

Look at the above exhibit. With price discrimination, the profit-maximizing quantities for the New York and Los Angeles markets are ?

Question 20 options:

25 and 40

140 and 120

126 and 142

40 and 25

Question 21(1 point)

As a consequence of a new satellite that the Pentagon recently deployed, people in Los Angeles receive Sal's New York broadcasts, and people in New York receive Sal's Los Angeles broadcasts. As a result, anyone in New York or Los Angeles can receive Sal's broadcasts by subscribing in either city. Thus Sal can charge only a single price. What price should he charge, and what quantities will he sell in New York and Los Angeles? The single price and quantities and New York and Los Angeles will be, in that order:

Question 21 options:

130.25, 30 and 35

140, 28.3 and 125

126.67, 28.3 and 36.7

130, 25 and 40

Question 22(1 point)

A price discriminating monopolist having identical costs in two separated markets should charge a higher price in that market

Question 22 options:

which has a higher demand.

which has a more elastic demand.

which has a less elastic demand.

which has a higher marginal revenue.

Question 23(1 point)

For the practice of price discrimination to be successful, the monopoly must

Question 23 options:

be able to prevent resale of its product.

face similar demand curves for various markets.

have similar costs among markets.

have a downward sloping marginal cost curve.

Question 24(1 point)

A price discriminating monopolist having identical costs in two separated markets should charge a higher price in that market

Question 24 options:

which has a higher demand.

which has a more elastic demand.

which has a less elastic demand.

which has a higher marginal revenue.

Question 25(1 point)

Perfect (first degree) price discrimination

Question 25 options:

is a common occurrence in situations with many buyers.

occurs fairly often in situations with only a few buyers.

Is only observed in competitive markets.

rarely occurs because firms do not have sufficient power to differentiate among specific buyers.

Question 26(1 point)

. Which of the following explains why theater prices for popcorn are three or four times higher than the popcorn price in the grocery store.

Question 26 options:

The grocery store sells a much higher volume and gets its profits that way.

The cost of popping the popcorn is high.

Grocery stores are satisfied with normal profit while theaters seek economic profit.

The demand curve for popcorn in a theater is more inelastic than the demand for popcorn at the grocery store.

None of the above is a reasonable explanation of the price differences.

Question 27(1 point)

A single price monopoly that faces the demand curve P = 10 - Q and profit maximizes by reducing price from $6 to $5 must have a marginal cost of

Question 27 options:

1

5

6

10

none of the above

Question 28(1 point)

If the monopolist facing the demand curve P = 10 - Q is a perfectly discriminating monopolist and marginal cost is constant at $4, how much will the firm sell if it profit maximizes?

Question 28 options:

3

4

5

6

none of the above

Question 29(1 point)

If the marginal costs are constant and zero for a single price monopolist facing the demand curve P = 10 - Q, what will profits be if fixed costs are 12?

Question 29 options:

10

12

13

38

none of the above

Question 30(1 point)

If the firm facing the demand curve P = 10 - Q still has zero marginal costs and is now a perfect price discriminator instead of a single price monopolist, what will profits be if fixed costs are 12?

Question 30 options:

10

12

13

38

none of the above