Which of the following is an example of group price discrimination? A) Senior citizen discounts. B) Buy two, get one free. C) Buy one, get another half off. D) None of the above. ANSWER A
Date: September 9th, 2020
Suppose a firm uses the following price strategy for every customer. The first two units purchased cost $4 each, and any extra unit costs $3.50. What kind of price discrimination is this? A) First-degree price discrimination B) Group price discrimination. C) Non-uniform pricing. D) Uniform pricing. ANSWER C
Date: September 9th, 2020
If consumers are identical, then A) price discrimination is impossible. B) price discrimination can occur if each consumer has a downward-sloping demand curve for the product. C) perfect price discrimination is the only form of price discrimination that can increase a monopoly’s profit. D) tie-in sales cannot increase a monopoly’s profit. ANSWER B
Date: September 9th, 2020
The case where a firm sells each unit at the maximum amount each customer is willing to pay for it is called A) first-degree price discrimination. B) second-degree price discrimination. C) third-degree price discrimination. D) nonlinear price discrimination. ANSWER A
Date: September 9th, 2020
Mouthwash is sold in 24 oz bottles for $2.40 and in 12 oz. bottles for $1.20. This represents A) price differentiation. B) price discrimination. C) marginal cost pricing. D) None of the above. ANSWER D
Date: September 9th, 2020
A cheese-by-mail club that charges an annual membership fee and an additional fee per cheese shipment utilizes A) perfect price discrimination B) third-degree price discrimination. C) two-part pricing. D) uniform pricing. ANSWER C
Date: September 9th, 2020
If two markets have the same price elasticity of demand at every price, a monopoly will not practice multimarket price discrimination. What will be an ideal response? ANSWER True. If both markets have the same price elasticity of demand, there is nothing to be gained by price discrimination.
Date: September 9th, 2020
A good example of perfect price discrimination is A) selling concert tickets to individuals on the street corner. B) buying concert tickets at the ticket window. C) selling concert tickets at the ticket window. D) buying a concert ticket on the street corner. ANSWER A
Date: September 9th, 2020
A perfect price discriminator A) charges each buyer her reservation price. B) charges different prices to each customer based upon different costs of delivery. C) generates a deadweight loss to society. D) charges lower prices to customers who buy greater quantities. ANSWER A
Date: September 9th, 2020
Price discrimination is welfare reducing. A) False, price discrimination can increase the coverage of a market thereby increasing welfare. B) False, price discrimination limits the coverage of a market thereby increasing welfare. C) True, price discrimination limits the coverage of a market thereby increasing welfare. D) True, price discrimination can increase the coverage of a […]
Date: September 9th, 2020
