Suppose all individuals are identical, and their monthly demand for Internet access from a certain leading provider can be represented as p = 5 – (1/2)q where p is price in $ per hour and q is hours per month. The firm faces a constant marginal cost of $1. If the firm will charge a […]
Date: September 9th, 2020
Nonlinear price discrimination is A) perfect price discrimination. B) quantity price discrimination. C) group price discrimination. D) two-part pricing. ANSWER B
Date: September 9th, 2020
The more block prices a monopoly can set instead of setting a single price, A) the smaller the deadweight loss. B) the more producer surplus. C) the larger the total welfare. D) All of the above. ANSWER D
Date: September 9th, 2020
A mail-order clothing company offers a discount if customers purchase two shirts instead of only one. This is necessarily an example of quantity discrimination. Indicate whether the statement is true or false ANSWER False. The shipping cost per item is less for two shirts than for one. This cost difference may explain the discount. […]
Date: September 9th, 2020
What is one reason suppliers might offer a discount for quantity purchases? A) reduced storage costs B) lower marginal cost C) lower marginal benefit D) price gouging ANSWER A
Date: September 9th, 2020
After analyzing his opponent, a tennis player decides to serve 10% of his serves to the left, 50% of his serves to the right, and 40% of his serves at the body of his opponent. This illustrates a A) deterministic strategy. B) dominant strategy. C) mixed strategy. D) non-game theoretic problem. ANSWER C
Date: September 9th, 2020
If you purchase one pound of apples the price is $1.50 per pound. If you buy a five pound bag of apples, the cost is $5.00. This is most likely an example of A) quantity discounts. B) lower marginal cost. C) lower marginal benefit. D) price gouging. ANSWER A
Date: September 9th, 2020
If firms that practice second degree price discrimination use more block prices, A) both consumer surplus and welfare will decrease. B) both consumer surplus and welfare will increase. C) consumer surplus will decrease, but welfare will increase. D) consumer surplus will increase, but welfare will decrease. ANSWER C
Date: September 9th, 2020
A hotel with market power charges customers who check in before 5:00 pm more than those who check in after 5:00 pm. Those who check in early are much more likely to use the hotel’s pool. Explain why this price difference may not be price discrimination. What will be an ideal response? ANSWER The […]
Date: September 9th, 2020
What is one reason consumers might demand a discount for quantity purchases? A) higher storage costs B) lower marginal cost C) lower marginal benefit D) price gouging ANSWER A
Date: September 9th, 2020
