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 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
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
Rent seeking in the form of lobbying for an increase in import tariffs by domestic producers A) increases consumer surplus. B) increases total welfare. C) increases the deadweight loss. D) None of the above. ANSWER C
Date: September 9th, 2020
When firms price discriminate they turn ________ into ________. A) producer surplus; revenue B) consumer surplus; profit C) total cost; profit D) producer surplus; consumer surplus ANSWER B
Date: September 9th, 2020
A per unit subsidy increases both consumer and producer surplus, but results in a deadweight loss. Indicate whether the statement is true or false ANSWER True . The government expenditure more than offset the gains to consumer and producer surplus resulting in a deadweight loss.
Date: September 9th, 2020
“Supporters of import restrictions and protectionist policies place greater weight on producer welfare than on consumer welfare.” Comment. What will be an ideal response? ANSWER Import restrictions increase the producer surplus of domestic producers. Consumer surplus, however, decreases by more than producers gain. Thus, the statement seems to be correct.
Date: September 9th, 2020
Tariffs and quotas create a loss in social welfare because A) producer surplus declines. B) revenues from tariffs are misspent. C) consumer surplus declines. D) All of the above. ANSWER C
Date: September 9th, 2020
Why do firms engage in price discrimination? A) to decrease cost B) to increase profits C) to increase consumer surplus D) to prohibit the resale of their products ANSWER B
Date: September 9th, 2020
