Q&A Hero

Q: Figure 16-3 Chantal owns a hairdressing salon which caters to two main groups of customers: residents of "The Chateau," a retirement community, and other residents in the neighborhood. Figure 16-3 shows the demand curves for the residents of the retirement community, labeled Market A, and other residents in the neighborhood, labeled Market B. The demand curves are not identical. Refer to Figure 16-3. Suppose Chantal practices price discrimination. Which of the following statements is true? A) Chantal's profits will be higher if she has uniform pricing instead of different prices for different groups of customers. B) By charging a higher price in market B, Chantal has transferred some of the consumer surplus from customers in market B to customers in market A. C) By charging different prices in markets A and B, Chantal can transfer some producer surplus into economic profit. D) By charging a higher price in market B, Chantal can convert some consumer surplus into economic profit.

Q: Figure 16-3 Chantal owns a hairdressing salon which caters to two main groups of customers: residents of "The Chateau," a retirement community, and other residents in the neighborhood. Figure 16-3 shows the demand curves for the residents of the retirement community, labeled Market A, and other residents in the neighborhood, labeled Market B. The demand curves are not identical. Refer to Figure 16-3. Which group of customers is likely to have a more elastic demand curve (more sensitive to price)? A) the other residents of the neighborhood - market B B) There is no difference in the elasticity of demand between the two groups. C) the customers from "The Chateau" - market A D) There is insufficient information to answer this question.

Q: Figure 16-3 Chantal owns a hairdressing salon which caters to two main groups of customers: residents of "The Chateau," a retirement community, and other residents in the neighborhood. Figure 16-3 shows the demand curves for the residents of the retirement community, labeled Market A, and other residents in the neighborhood, labeled Market B. The demand curves are not identical. Refer to Figure 16-3. What prices are charged in the two markets? A) price in market A = price in market B = $15 B) price in market A = $10; price in market B = $15 C) price in market A = price in market B = $5 D) price in market A = price in market B = $10

Q: Which of the following pricing strategies allows a firm to earn economic profit? A) price discrimination B) charging a price equal to marginal cost C) charging a price equal to the average total cost of production D) charging a price equal to the average variable cost of production

Q: Why might a producer practice price discrimination? A) to make its products more affordable to those with low incomes B) to maximize economic efficiency C) to maximize profits D) to maximize quantity demanded

Q: Which of the following products allows the seller to identify different groups of consumers (segment the market) and practice price discrimination? A) clothing items sold through Macy's Department Store B) a hamburger sold at Burger King C) a cafe latte sold at Starbucks D) tickets to matinee shows at a movie theatre

Q: Suppose Dublin Electronics charges regular customers $90 for a Blu-ray player but allows senior citizens to purchase the same item for $75. Is this likely to be a successful price discriminating strategy? A) Yes, firms price discriminate to maximize profits. B) No, price discrimination will not be effective because the store cannot prevent senior citizens from buying large quantities of Blu-ray players and reselling them for a profit. C) Yes, because senior citizens are likely to have a more elastic demand and therefore will be willing to pay a lower price compared to regular customers. D) No, because there are many different brands of Blu-ray players and consumers will shop around.

Q: Erin and Deidre, two residents of Ithaca, New York, are planning a trip to Boston. Erin, the sales manager for a large retailer, has to attend a business meeting. Deidre, a college student on vacation, is planning a leisurely trip to visit friends and relatives. Which of the following statements is true? A) An airline that price discriminates will charge Erin a higher price. B) An airline that price discriminates will charge Deidre a higher price. C) Since there is no difference in the cost of producing air travel, airlines will not charge different prices to Erin and Deidre. D) An airline cannot price discriminate because buyers can resell their tickets through the Internet.

Q: Erin and Deidre, two residents in Ithaca, New York, are planning a trip to Boston. Erin, the sales manager for a large retailer, has to attend a business meeting. Deidre, a college student on vacation, is planning a leisurely trip to visit friends and relatives. Whose demand curve for air travel is likely to be more elastic? A) Erin B) Deidre C) There is no difference in their price elasticities of demand. D) The elasticity of the demand curves for Erin and Deidre cannot be determined without more information.

Q: Which of the following is not an example of price discrimination? A) Adobe Systems offers software at discounted prices to students and faculty at K-12 and university levels. B) Unlike foreign tourists, citizens of Cambodia are exempted from paying an admission fee to the temples of Angkor. C) Senior citizens may purchase special fare tickets for public transportation that are not available to others. D) Buyers at an automotive parts store receive a discount for bulk buying because the store is able to pass on to its customers some of the lower average cost for producing large quantities.

Q: In which market structure is it not possible to practice price discrimination? A) perfect competition B) monopolistic competition C) oligopoly D) monopoly

Q: A price-discriminating firm charges the highest price to A) the group with the largest demand. B) the group with the most elastic demand. C) the group with the least elastic demand. D) the group with demand that is unit-elastic.

Q: If a firm knew every consumer's willingness to pay and could prevent arbitrage it could charge every consumer a different price. This practice is known as A) first-degree exploitation, or perfect price discrimination. B) maximization of producer surplus, or perfect price discrimination. C) first-degree price discrimination, or perfect price discrimination. D) first-degree transfer of consumer surplus, or perfect price discrimination.

Q: Many colleges and universities practice yield management. As a result, they offer different financial aid packages to different students. One result of yield management is that colleges often A) offer a less generous financial aid package to students who apply for an early admission decision. B) offer a more generous financial aid package to students who apply for an early admission decision. C) offer a less generous financial aid package to students with relatively high family incomes. D) offer a less generous financial aid package to students who don't participate in many extracurricular activities when they are in high school.

Q: 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.

Q: College students and faculty members have a more elastic demand than the general public for Apple's iMac desktop computers. From this we can conclude that A) Apple will charge college students and faculty members higher prices than it charges the general public. B) Apple will charge college students and faculty members lower prices than it charges the general public. C) the general public will earn arbitrage profits by buying iMac desktop computers from Apple and reselling them to college students and faculty members. D) Apple will earn economic profits from the computers it sells to the general public but will break even on the computers it sells to college students and faculty members.

Q: The prices college students and faculty members pay for Apple computers are lower than the prices Apple charges on its Website and in retail stores. Apple charges lower prices to college students and faculty members because A) college students and faculty members have a more elastic demand for computers than the general public. B) Apple can deduct from its federal taxes some of the costs of the computers it sells to college students and faculty members. C) college students and faculty members have a more inelastic demand for computers than the general public. D) college students and faculty members typically buy more supplies from Apple (print cartridges, paper, etc.,) than the general public.

Q: Perfect price discrimination is also known as A) monopoly. B) first-degree price discrimination. C) third-degree price discrimination. D) yield management.

Q: One reason why airlines charge business travelers and leisure travelers different prices is A) business travelers fly according to schedules that are planned months in advance. Many leisure travelers buy their tickets at the last minute. B) business travelers usually travel alone. Leisure travelers often fly with friends and family members; therefore, they have a more inelastic demand for airline tickets than business travelers. C) business travelers fly more often than most leisure travelers. As a result, their employers are able to bargain with airlines for lower fares than leisure travelers pay. D) business travelers often have inflexible schedules and have to travel on a particular day. The opposite is true for leisure travelers.

Q: Bubba's Hula Shack bar and bistro has begun giving customers who can show proof that they arrived at the establishment by public transportation a 10 percent discount on their total bill. All else equal, customers who arrive by public transportation to take advantage of Bubba's Hula Shack discount have a ________ for the services of the establishment than customers who drive to the establishment. A) higher price elasticity of demand B) lower price elasticity of demand C) higher price elasticity of supply D) lower price elasticity of supply

Q: Bubba's Hula Shack bar and bistro has begun giving customers who can show proof that they arrived at the establishment by public transportation a 10 percent discount on their total bill. This is an example of A) arbitrage. B) two-part tariff pricing. C) price discrimination. D) odd pricing.

Q: 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.

Q: Insurance companies typically charge women lower prices than men for automobile insurance. Is this an example of price discrimination? A) No, because, on average, women have better driving records than men and the costs of insuring men are greater than the costs of insuring women. B) Yes, because the costs of selling insurance to men and women are the same. C) Yes, because insurance companies can prevent arbitrage; that is, women cannot transfer their insurance coverage to men. D) No, because there are too many insurance companies for any one company to have market power. A firm must possess market power in order to practice price discrimination.

Q: Which of the following is a reason why a firm would not engage in price discrimination? A) Price discrimination is illegal in some western states and the owners of firms in these states face civil or criminal prosecution if they engage in price discrimination. B) Some firms are not able to segment the market for the products they sell. C) Some firms do not want to violate the law of one price. D) The transactions costs associated with selling the product exceed the price of the product.

Q: Which of the following is not a requirement for a successful price discrimination strategy? A) A firm must have market power. B) The firm must be able to prevent consumers who buy a product at a low price from reselling it to other consumers at a high price. C) Managers must practice yield management. D) Some consumers must have greater willingness to pay for the product than other consumers, and the firm must be able to know what prices consumers are willing to pay.

Q: Which of the following is not a requirement for a successful price discrimination strategy? A) A firm must have the ability to charge a price greater than marginal cost. B) Some consumers must have a greater willingness to pay for the product than other consumers, and the firm must be able to know what prices consumers are willing to pay. C) The firm must be able to prevent arbitrage. D) Transactions costs must be the same for all consumers.

Q: Arnold Marion, a first-year economics student at Fazer College, was given an assignment to find an example of price discrimination and present it to his class. When asked for his example Arnold said "I went to a Milwaukee Brewers baseball game with my cousin last week. We paid $25 each for our seats in left field. My aunt and uncle paid $50 each for their tickets; they sat five rows behind the first base dugout. This is an example of price discrimination since we paid different prices for the same product, and the differences were not due to differences in costs." How would Arnold's economics instructor assess Arnold's example? A) He would agree with Arnold that he had found an example of price discrimination, but would add that arbitrage would occur if ticket scalpers sold Brewers tickets for more than the prices Arnold and his uncle paid. B) He would disagree with Arnold's example because the $25 seats and the $50 seats were not the same products. C) He would agree with Arnold that he had found an example of price discrimination and would explain that the elasticity of demand for Brewers tickets is different for Arnold and his uncle. D) He would disagree with Arnold's example because there were differences in transactions costs for the $50 tickets and the $25 tickets.

Q: Which of the following is necessary in order for a firm to successfully practice price discrimination? A) The firm must practice product differentiation. B) The demand for the firm's product is inelastic. C) The firm must be able to segment the market for the product. D) The firm's transactions costs must be zero.

Q: Price discrimination is the practice of A) charging different prices for the same good when the price differences are not due to differences in cost. B) charging different prices for the same good when the price differences arise because of differences in cost. C) charging different prices for different qualities of a product. D) charging higher prices for brand named goods and lower prices for generic versions of the goods.

Q: If Mort's House of Flowers sells one dozen roses to different customers at different prices, economists would consider this an example of A) price gouging. B) rational ignorance. C) arbitrage. D) price discrimination.

Q: Consider the following pricing strategies: a. perfect price discrimination b. charging different prices to different groups of customers c. optimal two-part tariff d. single-price monopoly pricing Which of the pricing strategies leads to the economically efficient output level? A) a only B) a and b only C) a and c only D) a, b, and c only

Q: Consider the following pricing strategies: a. perfect price discrimination b. charging different prices to different groups of customers c. optimal two-part tariff d. single-price monopoly pricing Which of the pricing strategies allows a producer to capture the entire consumer surplus that would have gone to consumers under perfect competitive pricing? A) a, b, c, and d B) a, b, and c only C) a and b only D) a and c only

Q: 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. Suppose Plato Playhouse charges a single price of Pd for each performance. Which of the following statements is true? A) The company is selling more than the profit-maximizing quantity in the non-student market and less than the profit-maximizing quantity in the student market. B) The company is selling less than the profit-maximizing quantity in the non-student market and more than the profit-maximizing quantity in the student market. C) The company is selling less than the profit-maximizing quantity in both markets but it is maximizing its revenue. D) The company is selling less than the profit-maximizing quantity in both markets.

Q: 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. Suppose Plato Playhouse price discriminates. Which of the following statements is true? A) By charging two different prices, the theatre company has redistributed some profits from those who can pay higher prices to those who cannot, thereby increasing economic efficiency. B) By charging two different prices, the theatre company essentially allows those willing to pay higher prices to subsidize those who are not. C) By charging two different prices, the theatre company has redistributed some profits from those who can pay higher prices to those who cannot, thereby improving equity. D) Plato Playhouse will earn higher profits if it charges a single price an average of the two prices instead of charging two different prices to the two different groups of customers.

Q: 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 quantity sold to each group of customer and what is the total quantity sold? A) quantity sold to students=Qb;quantity sold to non-students=Qb; total sales=Qa B) quantity sold to students=Qc;quantity sold to non-students=Qb; total sales=Qb+Qc C) quantity sold to students=Qc;quantity sold to non-students=Qe; total sales=Qe+Qc D) quantity sold to students=Qc;quantity sold to non-students=Qd; total sales=Qd+Qc

Q: 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 = 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

Q: Figure 16-1 Refer to Figure 16-1. What is the economically efficient output level? A) Q1 units B) Q2 units C) Q3 units D) Q4 units

Q: Figure 16-1 Refer to Figure 16-1. What is the consumer surplus received under perfect price discrimination? A) the area under the demand curve above P1 B) the area under the demand curve above P3 C) the area under the demand curve above P4 D) zero

Q: Figure 16-1 Refer to Figure 16-1. What is the price charged under perfect price discrimination? A) P3 B) P4 C) a range of prices corresponding to the demand curve from P3 and above D) a range of prices corresponding to the demand curve from P4 and above

Q: Figure 16-1 Refer to Figure 16-1. With perfect price discrimination, the firm will produce and sell A) Q1 units. B) Q2 units. C) Q3 units. D) Q4 units.

Q: 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.

Q: With a monopolist engages in perfect price discrimination, the quantity produced and sold A) is lower than the quantity produced and sold if it adopted a single price. B) is larger than the quantity produced and sold if it adopted a single price. C) is the same level as that produced and sold if it adopted a single price. D) could be lower, higher or the same as that produced and sold if it adopted a single price.

Q: The antitrust law that prohibits price discrimination on grounds that it reduces competition is A) the Clayton Act. B) the Federal Trade Commission Act. C) the Robinson-Patman Act. D) the Sherman Act.

Q: Some consumer electronic products such as plasma TVs, DVD players and digital cameras, are introduced at very high prices but over time, their prices start falling (beyond what could be attributed to falling costs as companies take advantage of economies of scale and cheaper technologies). Which of the following is the best explanation for this observation? A) More firms are likely to enter the consumer electronic market over time, forcing market prices down. B) Early adopters of these new products typically have a higher demand and higher income compared to those who are willing to wait. C) Early adopters are more quality conscious and are willing to pay higher prices for the initial production of these goods. D) After satisfying the demand for early adopters, firms lower price to attract the more price sensitive consumers.

Q: Online companies gather personal information about the customers who shop on their Websites and some of those companies will use the data to estimate price elasticities of the customers. Doing this is a way that these companies might be able to charge a higher price for a product to those customers who have a ________ price elasticity of demand. A) high B) low C) negative D) unitary

Q: Reporters from the Wall Street Journal found that the office supply store Staples charged different prices for the same product to different online customers based primarily on A) the age of the customer. B) how close the customer's zip code was to competitors' stores. C) the gender of the customer. D) how many times the customer had looked up the product on its Website.

Q: Joss is a marketing consultant. Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report. Iris is willing to pay $500 for the service while Daphne is willing to pay $800. Suppose that the opportunity cost of Joss's time is $1,200. Assume that Iris and Daphne do not know each other. Which of the following statements is true? A) Joss should charge each customer $600; that way he will earn his opportunity cost and it will be fair to both Iris and Daphne. B) Joss should charge Iris $500 and Daphne no more than $700; that way he earns his opportunity cost and there is no loss in economic surplus. C) Joss should charge Iris $500 and Daphne $800; that way economic surplus is maximized. D) Joss should charge Iris $500 but charging Daphne $800 is unfair because it allows Joss to earn more than his opportunity cost.

Q: Joss is a marketing consultant. Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report. Iris is willing to pay $500 for the service while Daphne is willing to pay $800. Suppose that the opportunity cost of Joss's time is $1,200. Assume that Iris and Daphne do not know each other. If the price is $800 per copy A) both Iris and Daphne will purchase Joss's services and Joss will undertake the job. B) only Daphne will purchase Joss's services and Joss will undertake the job for her. C) only Daphne will want to purchase Joss's services but Joss will not be willing to do the work. D) neither Iris nor Daphne will commission the work.

Q: Joss is a marketing consultant. Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report. Iris is willing to pay $500 for the service while Daphne is willing to pay $800. Suppose that the opportunity cost of Joss's time is $1,200. Assume that Iris and Daphne do not know each other. If the price is $500 per copy A) only Iris will purchase Joss's services and Joss will undertake the job for her. B) only Daphne will purchase Joss's services and Joss will undertake the job for her. C) both Iris and Daphne will purchase Joss's services and Joss will undertake the job. D) both Iris and Daphne will want to purchase Joss's services but Joss will not be willing to undertake the job.

Q: Joss is a marketing consultant. Iris and Daphne are potential customers interested in commissioning Joss to undertake a market survey and compile the findings in a report. Iris is willing to pay $500 for the service while Daphne is willing to pay $800. Suppose that the opportunity cost of Joss's time is $1,200. Assume that Iris and Daphne do not know each other. If Joss charges the same price per copy to both Iris and Daphne A) the report will not get written. B) only Daphne will commission the job and the report will be written. C) both Iris and Daphne will commission the job and the report will be written. D) no conclusion can be drawn without information on the price.

Q: Which of the following does not arise from price discrimination? A) an increase in producer surplus B) an increase in consumer surplus C) an increase in quantity sold D) an increase in profits

Q: With perfect price discrimination there is A) no deadweight loss. B) no producer surplus. C) one single price. D) an increase in consumer surplus.

Q: If a firm could practice perfect price discrimination, it would A) allow resale of its product. B) charge every buyer a different price. C) charge a price based on the quantity of a product bought. D) use odd pricing.

Q: When colleges use yield management techniques, they A) rank students on the basis of academic merit and award higher financial aid offers to those at the top of the ranking. B) increase financial aid offers to students whose demand for college education is likely to be more price elastic and reduce financial aid offers to students whose demand for college education is likely to be less price elastic. C) rank students on the basis of academic merit and award higher financial aid offers to those at the bottom of the ranking. D) increase financial aid offers to students whose demand for college education is likely to be more price inelastic and reduce financial aid offers to students whose demand for college education is likely to be less price inelastic.

Q: Which of the following is a reason why airline yield management is an effective method to increase revenue? A) because airlines have invested heavily in developing computer models that identify optimal pricing strategies in the various market segments B) because airlines have successfully induced customers to reveal their resources and preferences by offering them different versions of the product such as business class and coach plane tickets C) because a ticket is a contract to transport a specific person, and is not transferable D) because airlines have a monopoly in long-distance carriage

Q: Yield management and price discrimination have enabled firms to increase profits and, at the same time A) reduce the cost of production. B) capture some consumer surplus. C) reduce transactions costs. D) transfer some producer surplus to consumers.

Q: From an economic perspective, price discrimination is desirable because A) the increase in profits is more than offset by the loss in consumer surplus, resulting in a net increase in economic surplus. B) it enables firms to increase profits with no loss in economic surplus, and in turn, this could provide firms with incentives to engage in beneficial product innovation. C) the increase in profits results in higher corporate tax revenues received by the government which could be used to subsidize consumption for low-income individuals. D) it redistributes wealth from wealthy consumers to highly innovative firms.

Q: An article on how prices in South Bend, Indiana rise during Notre Dame home football games noted: "For the Sept. 16 game against the University of Michigan, the South Bend Marriott is charging $649 a night for a double room.... The Marriott's regular weekend price is $149 a night." Source: Ilan Brat, "Notre Dame Football Introduces Its Fans To Inflationary Spiral,"Wall Street Journal, September 7, 2006, p. A1. Which of the following statements is true? A) The Marriott is practicing first-degree price discrimination by charging what the market will bear. B) This is evidence of third-degree price discrimination because hotel accommodation on a particular day is not a product that can be resold later. C) There is no evidence of price discrimination; the Marriott is responding to increased demand for hotel rooms in the face of constant supply. D) The Marriott has adopted this pricing strategy to capitalize on arbitrage profits.

Q: The Bay Area subway system, BART, offers senior citizens discounted fares for BART rides. This suggests that BART authorities believe that senior citizens have a ________ demand for subway rides. A) more income elastic B) less income elastic C) more price elastic D) less price elastic

Q: Calling long distance is often more expensive on weekdays between 8 am and 5 pm than in the evening hours. Why is this the case? A) Telephone companies hope to discourage customers from calling long distance during the day to keep their labor costs down. B) The cost of making long-distance connections is higher during the day than in the evenings. C) Businesses who must call suppliers or customers during business hours have few alternatives and therefore have an inelastic demand during the workday compared to after-work hours. D) Increasingly, businesses who must call suppliers or customers during business hours resort to the internet, thereby reducing demand for long-distance calls. To make up for this fall in demand, telephone companies charge higher rates.

Q: For a firm that can effectively price discriminate, who will be charged a lower price? A) customers who have an elastic demand for the product B) customers who have an inelastic demand for the product C) buyers that are members of the largest market segment D) buyers that are members of the smallest market segment

Q: A firm that can effectively price discriminate will charge a higher price to A) customers who have the more elastic demand for the product. B) customers who have the more inelastic demand for the product. C) buyers who belong to the largest market segment. D) buyers who are members of the smallest market segment.

Q: Table 16-2Quantity Demanded in Middle Fall (tubes per week)Price per TubeQuantity Demanded in West Fall (tubes per week)Price per Tube1$81$5.002724.503634.004543.505453.00Neem 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. Which of the following statements is trueabout the two markets?A) The demand in Middle Fall is more price elastic than the demand in West Fall.B) The demand in Middle Fall is less price elastic than the demand in West Fall.C) The demand in Middle Fall is more income elastic than the demand in West Fall.D) The demand in Middle Fall is less income elastic than the demand in West Fall.

Q: Table 16-2Quantity Demanded in Middle Fall (tubes per week)Price per TubeQuantity Demanded in West Fall (tubes per week)Price per Tube1$81$5.002724.503634.004543.505453.00Neem 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) $50B) $48C) $18D) $15

Q: Table 16-2Quantity Demanded in Middle Fall (tubes per week)Price per TubeQuantity Demanded in West Fall (tubes per week)Price per Tube1$81$5.002724.503634.004543.505453.00Neem 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) $30B) $34C) $68D) $70

Q: Table 16-2Quantity Demanded in Middle Fall (tubes per week)Price per TubeQuantity Demanded in West Fall (tubes per week)Price per Tube1$81$5.002724.503634.004543.505453.00Neem 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. How many tubes of toothpaste will Neem sell in West Fall and at what price?A) Q = 2 units; P = $4.50B) Q = 3 units; P = $4C) Q = 4 units; P = $3.50D) Q = 5 units; P = $3

Q: Table 16-2Quantity Demanded in Middle Fall (tubes per week)Price per TubeQuantity Demanded in West Fall (tubes per week)Price per Tube1$81$5.002724.503634.004543.505453.00Neem 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. How many tubes of toothpaste will Neem sell in Middle Fall and at what price?A) Q = 2 units; P = $7B) Q = 3 units; P = $6C) Q = 4 units; P = $5D) Q = 5 units; P = $4

Q: Which of the following firms is not able to practice price discrimination? A) movie theaters B) commercial airlines C) land-line telephone companies D) the largest wheat farmer in Nebraska

Q: Which of the following undermines a firm's ability to engage in price discrimination? A) the seller's market power B) the inability to prevent resale of the product from one market segment to another C) buyers having different elasticities of demand for the product D) the seller's ability to segment the total market

Q: Price discrimination is possible in which of the following market structures? a. perfect competition b. monopoly c. oligopoly d. monopolistic competition A) a, b, c, and d B) c and d only C) b and c only D) b, c, and d only

Q: Consider the following actions undertaken by a firm: a. charging the same price for products of different quality b. charging different prices to different consumers for the same product when the variation cannot be explained by cost differences c. charging different prices for products of different qualities d. charging a lower price to match a competitor's price Which of the above will be considered price discrimination? A) a, b, c, and d B) a, b, and d only C) b and d only D) a and b only

Q: Successful price discrimination cannot take place if A) the market is perfectly competitive. B) the market can be segmented into different buyer groups. C) customers are not able to resell the product. D) the demand curve facing the firm is downward-sloping.

Q: Which of the following is a necessary condition for successful price discrimination? A) The seller must possess market power. B) The buyer must possess market power. C) Transaction costs must be zero. D) Buyers must have identical inelastic demands.

Q: Most movie theatres charge different prices to different groups of customers for movie admission but not on movie popcorn. Which of the following is a reason for this? A) because the markup on movie popcorn is very high and movie theatres do not want to forego this source of revenue B) because the demand for popcorn is very high relative to the demand for movie admissions C) because it is easier to limit resale in movie admissions but not in popcorn D) because the cost of operating a concession stand in a movie theatre is very high compared to the cost of showing a movie

Q: Which of the following are necessary condition(s) for successful price discrimination? a. zero transaction cost b. a perfectly competitive market structure c. an imperfectly competitive market structure d. at least two different markets with different price elasticities of demand e. at least two different markets with different price elasticities of supply A) a, b, and d only B) c and d only C) a, c, d and, e only D) a and c only

Q: Which of the following products allows the seller to identify different groups of consumers (segment the market) at virtually no cost? A) early bird dinner specials B) books sold online C) a pair of Bose speakers D) iPhones

Q: Which of the following is not a way by which price discriminating firms can segment a market? A) on the basis of time of purchase, for example long-distance calling B) by requiring an advance purchase, for example air tickets C) on basis of the buyer's location, for example requiring out-of-state students to pay higher tuition D) on the basis of the supplier's marginal cost of production, for example requiring customers to pay a premium for customizing options

Q: Toot Sweets Bakery sells freshly baked muffins from 6.30 am at $1.20 per muffins. By 4 pm, the remaining muffins are marked down to $0.60 each. Which of the following statements is true? A) Toot Sweets engages in price discrimination; a higher price for those who cannot wait and a lower price for those willing to wait until 4 pm. B) Toot Sweets is trying to prevent the opportunity to make arbitrage profit. C) Toot Sweets is trying to minimize its loss. D) Toot Sweets has underestimated the demand for its muffins.

Q: Firms price discriminate A) to reduce the quantity sold so as to reduce production costs. B) to increase profits. C) to take advantage of customers. D) to increase total economic surplus.

Q: Why is price discrimination legal but not discrimination based on race or gender? A) because price discrimination increases profits and therefore tax revenues for the government, but discrimination based on race or gender reduces tax revenues B) because price discrimination reduces deadweight loss, but discrimination based on race or gender increases deadweight loss C) because price discrimination involves charging people different prices based on their willingness to pay rather than on the basis of arbitrary characteristics D) because price discrimination enables firms to increase output and employment, but race or gender based discrimination reduces employment