Question 1

0Cell phone companies offer pricing plan alternatives in order to convert some&#10;A)consumer surplus into profit&#10;B)producer surplus into profit&#10;C)economic profit into normal profit&#10;D)profit into consumer surplus&#10;E)consumer surplus into deadweight loss

Accepted Answer

Pricing plan alternatives allow cell phone companies to capture some of the consumer surplus that would have otherwise gone to the customer. By offering various plans with different features and pricing, companies can effectively price discriminate and incentivize certain behaviors (such as signing a contract or using autopay) to increase revenue and profit.

Question 2

In Exhibit 9&#173;18, how does market segment A differ from market segment B?&#10;A)demand is relatively more elastic in segment A than in segment B&#10;B)demand is relatively more income elastic in segment A than in segment B&#10;C)demand is relatively more income elastic in segment B than in segment A&#10;D)there are more consumers in segment A than in segment B&#10;E)demand is relatively more inelastic in segment A than in segment B

Accepted Answer

E

Question 3

Which of the following is not an example of price discrimination?&#10;A)IBM charges business users of its laser printer more than home users&#10;B)Intel offered faster and slower versions of a computer chip&#10;C)An amusement park charges the same admission fee to local residents and out&#173;of&#173;towners&#10;D)Adobe stripped some features from Photoshop to offer a cheaper version&#10;E)Holders of Nevada driver's licenses pay less to ride the Las Vegas monorail

Accepted Answer

Charging the same admission fee to local residents and out-of-towners is not an example of price discrimination as it does not involve charging different prices to different groups of customers based on their willingness to pay or other characteristics. The other choices all involve some form of price discrimination.

Question 4

Adam Matsumi is an attorney who can charge legal fees above thecompetitive level because entry of new competitors is made more difficult bythe need to hold a(n)&#10;A)state license&#10;B)patent&#10;C)essential resource&#10;D)economy of scale&#10;E)copyright

Accepted Answer

The question mentions that Adam Matsumi is an attorney, which means he must hold a state license in order to practice law. This license requirement acts as a barrier to entry for potential new competitors, as they would need to obtain their own state license before being able to charge legal fees. This makes it more difficult for new competitors to enter the market and compete with Adam Matsumi's higher fees.

Question 5

United States Postal Service has successfully leveraged its monopoly powerthrough&#10;A)online postage purchases&#10;B)delivery of Netflix DVDs&#10;C)an online bill&#173;paying service&#10;D)a secure online document transmission service&#10;E)increasing third&#173;class mail rates

Accepted Answer

Delivery of Netflix DVDs has been a key source of revenue for the USPS and has helped them leverage their monopoly power in the market. They have exclusive rights to deliver first-class mail and have used this to negotiate exclusive contracts with companies like Netflix.

Question 6

Consumer concern about &#34;blood diamonds,&#34; a diamond mined in a war zoneand sold to finance an insurgency, invading army's war efforts, or a warlord'sactivity, may have caused a drop in De Beers sales.

Accepted Answer

This statement is true. The concern over blood diamonds has led to increased awareness and demand for conflict-free diamonds, which may have affected De Beers' sales.

Question 7

Which of the following is an example of a local monopoly as compared to anational or international monopoly?&#10;A)a restaurant at a rural crossroads&#10;B)Alcoa during the 19th century&#10;C)De Beers Consolidated Mines&#10;D)AT&T&#10;E)U.S.Postal Service

Accepted Answer

A restaurant at a rural crossroads would only have a monopoly in that local area, compared to national or international monopolies such as Alcoa, De Beers Consolidated Mines, AT&T, and the U.S. Postal Service which operate on a larger scale.

Question 8

After a corporate merger, Rebecca Jalamid became the CEO of a monopolyfirm.She was surprised to learn that one benefit of being a monopoly was thather company&#10;A)could charge as high a price as desired&#10;B)was in a good position to capture the fruits of any innovation&#10;C)received increased scrutiny from government regulators&#10;D)started to attract potential competitors motivated to get a share of the economic profits of Rebecca's company&#10;E)contributed to the deadweight loss in the economy

Accepted Answer

Monopolies have the advantage of being able to capture the fruits of any innovation because they don't have any competition to deal with. As the only player in the market, Rebecca's company would be able to set the price of its products or services without any pressure from other firms to lower it. This gives the company more control over its profits and more freedom to experiment with new ideas without fear of losing market share to competitors.

Question 9

In Exhibit 918, a price discriminating monopolist will charge what price? A)P₁ in segments A and B B)P₂ in segments A and B C)P₃ in segments A and B D)P₁ in segment A and P₂ in segment B E)unable to be determined

Accepted Answer

The price discriminating monopolist will charge a different price in each segment based on the demand in that segment. In segment A, the demand curve intersects the marginal cost curve at point U1, so the monopolist will charge the highest price possible in that segment, which is PS1. In segment B, the demand curve intersects the marginal cost curve at point U2, so the monopolist will charge the highest price possible in that segment, which is PS2. Therefore, in segment A, the price charged will be P₁, and in segment B, the price charged will be P₂. The best choice that reflects this is D.

Question 10

In Exhibit 918, a nondiscriminating monopolist will charge what price? A)P₁ B)P₂ C)P₃ D)either P₁ or P₂ E)unable to tell from the information given

Accepted Answer

The answer of   In Exhibit 9&#173;18, a non&#173;discriminating...

Question 11

Business&#173;class airline tickets cost much more than coach&#173;class ticketsbecause, compared to householders, businesspeople's demand for travel is&#10;A)equally elastic&#10;B)unitary elastic&#10;C)more elastic&#10;D)less elastic&#10;E)not a factor in the cost of airline tickets

Accepted Answer

The answer of Business&#173;class airline tickets cost much more than...

Question 12

Which of the following is not an example of De Beers Diamonds trying toincrease consumer demand?&#10;A)sending the marketing message that a diamond lasts forever&#10;B)ads that illustrate that a diamond should remain in the family and not be sold&#10;C)informing potential customers about how diamonds lose monetary value over time&#10;D)introducing the idea of the diamond engagement ring&#10;E)the &#34;spirit ring&#34; as a sign of independence

Accepted Answer

The answer of Which of the following is not an...

Deck 9: Monopoly