At the current price of a good, Al’s consumer surplus equals 15 and Ben’s consumer surplus equals 15. By using two-part pricing, a monopolist could increase his profit by A) 8. B) 16. C) 15. D) 30. ANSWER D
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
Which of the following is a simultaneous decision game? A) Tic-tac-toe B) Chess C) Poker D) Rock-paper-scissors ANSWER D
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
