When a firm uses a form of quantity discrimination that charges large purchasers less it is the high quantity purchasers that generate most profit. Indicate whether the statement is true or false ANSWER False. Most profit is generated by the fact that the firm is able to charge a high price to purchasers of […]
Date: September 9th, 2020
Purchasing a season pass to the local symphony A) is an example of first degree price discrimination. B) is an example of second degree price discrimination. C) is an example of third degree price discrimination. D) All of the above. ANSWER B
Date: September 9th, 2020
Declining-block quantity discrimination makes sense if A) buyers of smaller quantities are more price sensitive than buyers of larger quantities. B) buyers of smaller quantities are less price sensitive than buyers of larger quantities. C) demand for the good is perfectly elastic. D) the lower price for larger quantities encourages all consumers to purchase the […]
Date: September 9th, 2020
In a two-player simultaneous game where neither player has a dominant strategy, A) there is never a Nash equilibrium. B) there is only one Nash equilibrium. C) the actual outcome is unpredictable. D) the actual outcome will not be a Nash equilibrium. ANSWER C
Date: September 9th, 2020
A mixed strategy may A) be part of a Nash equilibrium. B) be a set of probabilities of selecting each possible action. C) lead identical firms to choose different actions. D) All of the above. ANSWER D
Date: September 9th, 2020
If a firm sells to two distinct identifiable markets and resale is impossible, why is price discrimination more profitable than setting a single price? What will be an ideal response? ANSWER If the firm charges a single price on the two different markets, marginal revenue in one market will exceed marginal revenue in the […]
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
