Explain using welfare measures whether consumers prefer a single price monopoly or a perfect-price-discriminating monopoly. What will be an ideal response? ANSWER Consumers prefer a single price monopoly because they gain some consumer surplus. No consumer surplus exists with a perfect-price-discriminating monopoly.
Date: September 9th, 2020
A monopoly will NOT be able to perfectly price discriminate if A) each consumer does not reveal her reservation price. B) demand is very elastic. C) the firm’s marginal cost curve is upward sloping. D) All of the above. ANSWER A
Date: September 9th, 2020
Suppose a monopoly’s inverse demand curve is P = 100 – Q, it produces a product with a constant marginal cost of 20, and it has no fixed costs. Compared to the consumer surplus if the market were perfectly competitive, consumer surplus is how much less when the monopolist practices perfect price discrimination? A) 3200 […]
Date: September 9th, 2020
At the current price of a good, Jessica’s consumer surplus equals 12, Lauren’s consumer surplus equals 14, and Isabel’s consumer surplus is 4. By perfect discrimination, a monopolist could increase his profit by A) 4. B) 12. C) 16. D) 30. ANSWER D
Date: September 9th, 2020
What is one reason car dealerships might move away from perfect price discrimination to uniform pricing? A) Perfect price discrimination doesn’t work. B) Transaction costs erode the profit of perfect price discrimination. C) Consumers are ill-informed and tend to complain too much. D) Uniform pricing is always more profitable and more fair as well. […]
Date: September 9th, 2020
Which of the following helps a monopoly perfectly price discriminate? A) unit demand by each consumer B) the product is perishable C) the product is personalizable D) All of the above. ANSWER D
Date: September 9th, 2020
If the price of business broadband is greater than that of residential broadband, all else equal, A) business has greater price elasticity than residential. B) residential has greater price elasticity than business. C) both have positive income elasticity. D) generally speaking, broadband is equally priced. ANSWER B
Date: September 9th, 2020
A group price discriminator sells its product in Florida for three times the price it sets in New York. Assuming the firm faces the same constant marginal cost in each market and the price elasticity of demand in New York is -2.0, the demand in Florida A) has an elasticity of -6.0. B) is more […]
Date: September 9th, 2020
Historically, price discrimination was considered illegal in all instances. More recently, antitrust authorities have discovered that A) price discrimination can increase the coverage of a market thereby increasing welfare. B) price discrimination limits the coverage of a market thereby increasing welfare. C) price discrimination limits the coverage of a market thereby decreasing welfare. D) price […]
Date: September 9th, 2020
A perfect-price-discriminating monopoly’s marginal revenue curve A) lies below the demand curve. B) is the demand curve. C) varies for each consumer. D) is the same as the monopolist’s marginal revenue curve. ANSWER B
Date: September 9th, 2020
