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With tying


A) the firm tries to price each unit at the consumer's reservation price.
B) the firm offers consumers a quantity discount.
C) the firm charges different consumer groups or market segments a different price.
D) a buyer can only purchase one product by agreeing to purchase some other product as well.

E) B) and D)
F) C) and D)

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With first-degree price discrimination,the marginal revenue curve


A) is below the demand curve, with equal to twice the slope of demand.
B) is above the demand curve.
C) is the same as the demand curve.
D) is below the demand curve, with slope equal to one-half the slope of demand.

E) C) and D)
F) B) and D)

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**Reference: Use the following table to answer the next three questions (46-48) . **Reference: Use the following table to answer the next three questions (46-48) . -*If the firm does not bundle the products,what single price should the firm charge for product A to maximize profit? A) 500 B) 800 C) 900 D) 1,000 -*If the firm does not bundle the products,what single price should the firm charge for product A to maximize profit?


A) 500
B) 800
C) 900
D) 1,000

E) C) and D)
F) B) and D)

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When a firm engages in __________,every unit of output is sold at the same price; when a firm engages in ___________,different consumers are charged different prices for the same good.


A) arbitrage; uniform pricing
B) price discrimination; uniform pricing
C) uniform pricing; price discrimination
D) surplus capturing; price discrimination

E) All of the above
F) B) and C)

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**Reference: Use the following table to answer the next three questions (46-48) . **Reference: Use the following table to answer the next three questions (46-48) . -*If the firm does not bundle the products,what single price should the firm charge for product B to maximize profit? A) 100 B) 200 C) 300 D) 400 -*If the firm does not bundle the products,what single price should the firm charge for product B to maximize profit?


A) 100
B) 200
C) 300
D) 400

E) A) and B)
F) None of the above

Correct Answer

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A monopolist faces inverse demand A monopolist faces inverse demand and has constant marginal cost .If this monopolist engages in first-degree price discrimination,total output will equal A) 20 units B) 40 units C) 60 units D) 80 units and has constant marginal cost A monopolist faces inverse demand and has constant marginal cost .If this monopolist engages in first-degree price discrimination,total output will equal A) 20 units B) 40 units C) 60 units D) 80 units .If this monopolist engages in first-degree price discrimination,total output will equal


A) 20 units
B) 40 units
C) 60 units
D) 80 units

E) A) and B)
F) None of the above

Correct Answer

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With ________ degree price discrimination,the firm tries to price each unit at the consumer's reservation price.


A) first
B) second
C) third
D) fourth

E) A) and D)
F) B) and C)

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Bundling,in economic terms,is demonstrated by which of the following statements?


A) Homemakers in the upper Midwest typically buy all of their families' winter clothing at the same time.
B) When an economics professor assigns numerous readings to a class, he/she is practicing bundling.
C) When you purchase a personal computer, it generally is already loaded with software and comes with a monitor, keyboard and mouse.
D) Performing multiple tasks simultaneously in a work environment is an example of bundling.

E) B) and C)
F) A) and D)

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What is the difference between uniform pricing and price discrimination?


A) Uniform pricing and price discrimination are the same.
B) With uniform pricing firms charge different prices for the same good or service and with price discrimination firms charge the same price for the same good or service.
C) With uniform pricing firms charge the same price for the same good or service and with price discrimination the firms charge different prices for the same good or service.
D) The uniform price is always higher than the discriminated price.

E) All of the above
F) C) and D)

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Electricity prices may be an example of ___________ as it often varies by the time of day,generally being set higher when demand is at its peak


A) Intemporal price discrimination
B) Tie-in-sales
C) First degree discrimination
D) Second degree discrimination

E) B) and C)
F) None of the above

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You own a small bookstore.You have hired a marketing firm to calculate your own price elasticity of demand and your advertising elasticity of demand.The firm has provided you with the relevant numbers regardless of minor adjustments in price or advertising budget.Your own price elasticity of demand is around -1.7,and your advertising elasticity of demand is around 0.05.How much should you mark-up your price over your marginal cost for your books?


A) By approximately a factor of 0.41.
B) By approximately a factor of 2.43.
C) By approximately a factor of 37 percent.
D) By approximately a factor of 70 percent.

E) C) and D)
F) B) and C)

Correct Answer

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Which of the following statements regarding price discrimination is false?


A) In order to capture more surplus, the firm must have some market power.
B) The firm must have some information about the different amounts people will pay for the product.
C) The firm must be able to prevent resale.
D) The firm must be able accurately forecast total sales.

E) None of the above
F) C) and D)

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Which of the following is not necessary for a firm to be able to engage in price discrimination?


A) A firm must have some market power.
B) A firm must have some information about its consumers' willingness to pay.
C) A firm must be a price-taker.
D) A firm must be able to prevent arbitrage.

E) A) and C)
F) B) and D)

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With block pricing the monopolist


A) charges each consumer her reservation price.
B) charges each consumer the same price.
C) sells the first number of units at one price and additional units at a second price.
D) requires the consumer to purchase minimum quantities.

E) All of the above
F) None of the above

Correct Answer

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Which of the following is a real-world example of tying?


A) A movie theater charges senior citizens a cheaper price for movie tickets than it charges non-senior citizens for the same movie ticket.
B) Sam's Club® warehouses sell bulk quantities of macaroni and cheese for a cheaper per unit price than a grocery store, but the boxes are packaged together so that the customer must buy six boxes at a time.
C) An airline charges more for a first-class ticket than for a coach ticket.
D) The manufacturer of an instant-prints camera is the only manufacturer of the film that the camera uses.

E) All of the above
F) B) and D)

Correct Answer

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Suppose you sign-up for a membership at a video rental store.When you sign-up you are charged a subscription fee,and in addition you will be charged for each video you rent.This is an example of


A) first-degree price discrimination.
B) second-degree price discrimination.
C) third-degree price discrimination.
D) bundling.

E) B) and C)
F) None of the above

Correct Answer

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Suppose you own a business and your own price elasticity is -2.In addition,suppose your advertising elasticity of demand is 0.50.If your marginal cost per unit is $4,what is your optimal advertising-to-sales ratio?


A) 0.25
B) 0.375
C) 0.625
D) 1.25

E) B) and D)
F) C) and D)

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Let the inverse demand curve for a monopolist's product be P = 100 - 2Q and the marginal cost of production be constant at MC = 10.Suppose that the firm considers moving from a uniform pricing strategy to a two-block tariff where the first block provides 15 units at a price of P1 = $70 and the second block provides an additional 15 units at a price of P2 = $40.How much does the monopolist's profit rise with this scheme?


A) $225
B) $337.50
C) $450.50
D) $512

E) B) and C)
F) A) and B)

Correct Answer

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