The practice of setting price by increasing the average costs of production by some percentage is referred to as:

A) average cost pricing.

B) percentage pricing.

C) rate-of-return pricing.

D) markup pricing.

Answer:

22) When the marginal revenue resulting from a decrease in price is negative, demand for the product is:

A) elastic.

B) unit elastic.

C) inelastic.

D) cannot be determined without more information.

Answer:

23) The practice of charging different prices to various groups of customers that are not based on differences in the costs of production is referred to as:

A) predatory pricing.

B) markup pricing.

C) discretionary pricing.

D) price discrimination.

Answer:

24) Third-degree price discrimination refers to situation in which:

A) a firm charges different prices for different blocks of output.

B) a firm separates markets according to the price elasticity of demand.

C) a firm is able to charge the maximum price consumers are willing to pay for each unit of output.

D) a firm divides a market into thirds and charges each segment a different price.

Answer:

25) Which of the following is an example of price discrimination?

A) Increasing the price of a product when demand for the product increases.

B) Charging different prices for a product in different regions of the country due to differences in transportation costs.

C) Bundling complementary products to attract additional sales.

D) Reducing the price of a product to reduce excess inventory