Question 1

What is the difference between uniform pricing and price discrimination?&#10;A)Uniform pricing and price discrimination are the same.&#10;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.&#10;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.&#10;D)The uniform price is always higher than the discriminated price.

Accepted Answer

Uniform pricing refers to a pricing strategy where firms charge the same price for the same good or service to all customers, while price discrimination involves charging different prices to different customers for the same good or service. Therefore, option C correctly identifies the difference between the two pricing strategies. Option A is incorrect since the two strategies are different. Option B is incorrect because it describes the opposite of what the two pricing strategies actually are. Option D is incorrect since there is no guarantee that uniform price is always higher or lower than the discriminated price; it depends on various factors such as market conditions, demand, and supply. With uniform pricing, firms charge the same price for the same good or service. This means that all customers pay the same price regardless of their willingness to pay. With price discrimination, firms charge different prices for the same good or service based on the customer's willingness to pay. This means that customers who are willing to pay more will be charged a higher price, while customers who are less willing to pay will be charged a lower price. Therefore, the correct answer is 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.

Question 2

Which of the following statements regarding price discrimination is false?&#10;A)In order to capture more surplus, the firm must have some market power.&#10;B)The firm must have some information about the different amounts people will pay for the product.&#10;C)The firm must be able to prevent resale.&#10;D)The firm must be able accurately forecast total sales.

Accepted Answer

The firm does not necessarily need to accurately forecast total sales in order to engage in price discrimination. In fact, by charging different prices to different groups of customers, the firm may be able to better manage its sales and avoid excess inventory or shortages. However, having some knowledge of demand and consumer behavior is important for effective price discrimination. Price discrimination does not require accurate forecasting of total sales. In fact, price discrimination often involves selling different quantities of the product at different prices, which can make forecasting more difficult.

Question 3

Which of the following statements regarding price discrimination is true?&#10;A)In order to capture more surplus, the firm must have some market power.&#10;B)Third-degree price discrimination is illegal.&#10;C)Second-degree price discrimination refers to pricing differently for different market segments.&#10;D)First-degree price discrimination is relatively easy to implement.

Accepted Answer

Price discrimination occurs when a firm charges different prices for the same product to different customers. In order to practice price discrimination and capture more surplus, the firm must have some market power to prevent customers from arbitraging (buying only the cheaper product and reselling it at the higher price). Therefore, option A is correct. Option B is incorrect as third-degree price discrimination is legal if it does not lead to antitrust violations. Option C is also incorrect as second-degree price discrimination refers to pricing differently based on the quantity of the product purchased. Option D is incorrect as first-degree price discrimination is difficult to implement as it requires perfect information about each customer's reservation price. Price discrimination involves charging different prices for the same product to different customers. In order to do this and capture more surplus, the firm must have some market power, meaning it has control over the price it charges. First-degree price discrimination involves charging each customer their maximum willingness to pay and is difficult to implement. Second-degree price discrimination involves offering different prices based on quantity purchased or other discriminatory factors, such as student or senior discounts. Third-degree price discrimination is the most common type and involves charging different prices to different market segments, such as charging higher prices to business travelers than leisure travelers. While third-degree price discrimination is legal, it cannot be used to discriminate based on certain protected characteristics, such as race or gender.

Question 4

Suppose that a firm faces a demand curve for its product of . The corresponding marginal revenue curve is . The firm has a constant marginal cost of $4 per unit. If the firm engages in uniform pricing, what price will the firm charge?

A)$7.
B)$5.
C)$4.
D)$3.

Accepted Answer

The profit-maximizing rule for a firm is to produce the quantity where marginal revenue equals marginal cost. In this case, the marginal cost is constant at $4 per unit. The marginal revenue curve is given by $M R = 10 - 2 Q$ .

Setting marginal revenue equal to marginal cost, we get:

$$10 - 2Q = 4$$

Solving for Q, we get:

$$Q = 3$$

Substituting Q = 3 into the demand curve, we get:

$$P = 10 - Q ^ { d } = 10 - 3 = 7$$

Therefore, the firm will charge a price of $7 per unit. The answer is A). To find the profit-maximizing quantity, we set marginal revenue equal to marginal cost and solve for Q:
10 - 2Q = 4
6 = 2Q
Q = 3
Now that we have the optimal quantity, we can plug that into the demand equation to find the price the firm should charge:
P = 10 - Qd = 10 - 3 = 7
Therefore, the firm should charge $7 per unit if it engages in uniform pricing.

Question 5

Which of the following is not necessary for a firm to be able to engage in price discrimination?&#10;A)A firm must have some market power.&#10;B)A firm must have some information about its consumers' willingness to pay.&#10;C)A firm must be a price-taker.&#10;D)A firm must be able to prevent arbitrage.

Accepted Answer

Price discrimination involves a firm being able to charge different prices to different groups of consumers. Therefore, a firm must have market power (i.e. the ability to influence the market price), must have information about consumers' willingness to pay, and must be able to prevent arbitrage (i.e. the practice of taking advantage of price differences between markets). However, being a price-taker (i.e. unable to influence the market price) would make it difficult for a firm to engage in price discrimination. A firm that engages in price discrimination cannot be a price-taker. Price-takers are firms that have no market power and must accept the market price. Since price discrimination requires some degree of market power, option A is necessary. Additionally, in order to effectively practice price discrimination, a firm must have information about its consumers' willingness to pay (option B) and be able to prevent arbitrage (option D).

Question 6

Price discrimination:&#10;A)has been illegal in the United States since 1963.&#10;B)is the practice of charging consumers different prices for the same good or service.&#10;C)is customarily observed when the sales representative in a store charges each customer what he/she thinks is the highest price the customer will bear.&#10;D)is most common in perfectly competitive industries.

Accepted Answer

Price discrimination is the practice of charging different prices for the same good or service. It is not illegal in the United States, although there are certain types of price discrimination that are illegal, such as discrimination based on race or gender. Price discrimination is also not customarily observed by charging each customer what the sales representative thinks they will pay, but rather involves a more carefully planned strategy. Finally, price discrimination is actually less common in perfectly competitive industries, where firms have little control over price. Price discrimination is the practice of charging different prices for the same good or service. This can be done based on factors such as the customer's willingness to pay, location, time of purchase, and quantity bought. While price discrimination is not illegal in the United States, it is illegal to discriminate based on factors such as race, gender, or religion. Price discrimination is typically observed in markets with some degree of market power, such as monopolies or oligopolies.

Question 7

An example of second-degree price discrimination is:&#10;A)when you get an &#34;early bird&#34; discount by eating at a restaurant before 6:00 pm.&#10;B)when you sell something illegally to an individual through the mail.&#10;C)when you segment the market and charge individuals of different ages different prices for the same product or service.&#10;D)when you order 12 of something online and you pay less per unit than if you had bought only one.

Accepted Answer

Second-degree price discrimination involves offering different prices based on the quantity purchased. In this case, buying 12 units results in a lower per-unit price than buying just one, which is an example of second-degree price discrimination.

Question 8

With ___________________, the firm tries to price each unit at the consumer's reservation price while with _____________________, the firm charges different uniform prices to different consumer groups or market segments.

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

Accepted Answer

First-degree price discrimination, also known as perfect price discrimination, involves a firm charging each individual customer a different price that matches their willingness to pay. This is the most efficient form of price discrimination but requires the firm to have perfect information about each customer's reservation price. Third-degree price discrimination involves charging different prices to different consumer groups based on their willingness to pay, such as senior discounts or student discounts. This is the most common form of price discrimination but is less efficient than first-degree discrimination. First-degree price discrimination is also known as perfect price discrimination. In this type of price discrimination, the firm tries to charge each customer their maximum willingness to pay or reservation price. Third-degree price discrimination is when the firm charges different prices to different market segments based on their different price elasticities of demand.

Question 9

A monopolist faces inverse demand and has constant marginal cost . If this monopolist changes from a policy of uniform pricing to a policy of first-degree price discrimination, deadweight loss will decrease by:

A)0
B)1,600
C)3,200
D)12,800

Accepted Answer

First-degree price discrimination allows the monopolist to capture all consumer surplus, eliminating deadweight loss. The deadweight loss under uniform pricing is the area of the triangle between the demand curve and the marginal cost curve. Calculating this area gives a deadweight loss of 3,200, which is eliminated under first-degree price discrimination.

Question 10

The conditions for capturing more surplus from price discrimination include:&#10;A)an ability to determine which groups of people have the greatest wealth.&#10;B)an ability to differentiate different market segments meaning that some groups of people are willing to pay more for a product than others.&#10;C)an ability to prevent presales of products.&#10;D)A perfectly competitive industry structure.

Accepted Answer

Price discrimination involves charging different prices to different groups of consumers based on their willingness to pay. Therefore, the ability to differentiate market segments and identify which groups are willing to pay higher prices is essential for capturing more surplus through price discrimination. The other choices, such as determining which groups have the greatest wealth or preventing presales, may be factors that help facilitate price discrimination in some cases, but they are not necessary conditions for it. A perfectly competitive industry structure may actually make it more difficult to implement price discrimination, as consumers in a perfectly competitive market will have many close substitutes to choose from and may be less willing to pay higher prices. Price discrimination involves setting different prices for different market segments, with some groups willing to pay more for a product than others. By differentiating these segments, the seller can capture more surplus. The other options (A, C, and D) do not necessarily contribute to capturing more surplus through price discrimination.

Question 11

Which of the following statements regarding a monopoly's first-degree price discrimination is correct?&#10;A)With first-degree price discrimination, consumer surplus is small, yet still greater than zero.&#10;B)With first-degree price discrimination, producer surplus is lower than with uniform pricing.&#10;C)With first-degree price discrimination, deadweight loss is large.&#10;D)With first-degree price discrimination, total surplus is greater than when the monopoly charges a uniform price.

Accepted Answer

The answer of Which of the following statements regarding a...

Question 12

An example of first-degree price discrimination would occur:&#10;A)if a sales agent illegally sold a commodity to a federal agent above the competitive market price.&#10;B)when you sell something illegally to an individual through the mail.&#10;C)if a car salesman could accurately guess the maximum amount each customer would be willing to pay for a vehicle and charge him/her that price.&#10;D)when you order 12 of something online and you pay less per unit than if you had bought only one.

Accepted Answer

The answer of An example of first-degree price discrimination would...

Question 13

A monopolist faces demand   and has constant marginal cost   . If this monopolist engages in first-degree price discrimination, consumer surplus will be:&#10;A)0&#10;B)1,600&#10;C)3,200&#10;D)12,800

Accepted Answer

The answer of A monopolist faces demand   and...

Question 14

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.&#10;A)arbitrage; uniform pricing&#10;B)price discrimination; uniform pricing&#10;C)uniform pricing; price discrimination&#10;D)surplus capturing; price discrimination

Accepted Answer

The answer of When a firm engages in __________, every...

Question 15

With second-degree price discrimination:&#10;A)the firm tries to price each unit at the consumer's reservation price.&#10;B)the firm offers consumers a quantity discount.&#10;C)the firm charges different consumer groups or market segments a different price.&#10;D)a buyer can only purchase one product by agreeing to purchase some other product as well.

Accepted Answer

The answer of With second-degree price discrimination:&#10;A)the firm tries to...

Question 16

Suppose that a firm faces a demand curve for its product of . The corresponding marginal revenue curve is . The firm has a constant marginal cost of $4 per unit. If the firm engages in first-degree price discrimination, how much producer surplus will it capture?

A)$21.
B)$18.
C)$9.
D)$4.50

Accepted Answer

The answer of Suppose that a firm faces a demand...

Question 17

With ________ degree price discrimination, the firm tries to price each unit at the consumer's reservation price.&#10;A)first&#10;B)second&#10;C)third&#10;D)fourth

Accepted Answer

The answer of With ________ degree price discrimination, the firm...

Question 18

A monopolist faces inverse demand and has constant marginal cost . If this monopolist changes from a policy of uniform pricing to a policy of first-degree price discrimination, deadweight loss will decrease by:

A)0
B)1,600
C)3,200
D)12,800

Accepted Answer

The answer of A monopolist faces inverse demand  ...

Question 19

With first-degree price discrimination, the marginal revenue curve:&#10;A)is below the demand curve, with slope equal to twice the slope of demand.&#10;B)is above the demand curve.&#10;C)is the same as the demand curve.&#10;D)is below the demand curve, with slope equal to one-half the slope of demand.

Accepted Answer

The answer of With first-degree price discrimination, the marginal revenue...

Question 20

A monopolist faces inverse demand and has constant marginal cost . If this monopolist changes from a policy of uniform pricing to a policy of first-degree price discrimination, deadweight loss will decrease by:

A)0
B)1,600
C)3,200
D)12,800

Accepted Answer

The answer of A monopolist faces inverse demand  ...

Question 21

Which of the following statements is not correct regarding a &#34;damaged goods strategy&#34;?&#10;A)A damaged good strategy is an example of &#34;versioning&#34;.&#10;B)A damaged good strategy can be an example of third-degree price discrimination.&#10;C)A damaged good strategy can be an example of &#34;building fences&#34;.&#10;D)A damaged good strategy is generally less profitable than a uniform pricing strategy for a high quality product.

Accepted Answer

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

Question 22

With third-degree price discrimination:&#10;A)the firm tries to price each unit at the consumer's reservation price.&#10;B)the firm offers consumers a quantity discount.&#10;C)the firm charges different consumer groups or market segments a different price.&#10;D)a buyer can only purchase one product by agreeing to purchase some other product as well.

Accepted Answer

The answer of With third-degree price discrimination:&#10;A)the firm tries to...

Question 23

Which of the following is not a real-world example of third-degree price discrimination?&#10;A)A railroad charges more to haul 100 tons of coal than it does to haul 100 tons of grain.&#10;B)An airline charges a lower price for a coach ticket purchased four weeks in advance than for the same type of ticket purchased three days in advance.&#10;C)A movie theater charges senior citizens a cheaper price for movie tickets than it charges non-senior citizens for the same movie ticket.&#10;D)Sam's Club&#174; 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.

Accepted Answer

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

Question 24

With block pricing the monopolist:&#10;A)charges each consumer her reservation price.&#10;B)charges each consumer the same price.&#10;C)sells the first number of units at one price and additional units at a second price.&#10;D)requires the consumer to purchase minimum quantities.

Accepted Answer

The answer of With block pricing the monopolist:&#10;A)charges each consumer...

Question 25

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Accepted Answer

The answer of 11eb9f96_6e03_dea0_99ce_8977e22c94ca_TB8502_00...

Question 26

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Accepted Answer

The answer of 11eb9f96_6e03_425f_99ce_ed9d95b091b9_TB8502_00...

Question 27

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:&#10;A)first-degree price discrimination.&#10;B)second-degree price discrimination.&#10;C)third-degree price discrimination.&#10;D)bundling.

Accepted Answer

The answer of Suppose you sign-up for a membership at...

Question 28

During the winter months, the price of natural gas is high. During the summer months, the price of natural gas is low. This could be an example of:&#10;A)first-degree price discrimination.&#10;B)second-degree price discrimination.&#10;C)third-degree price discrimination.&#10;D)bundling.

Accepted Answer

The answer of During the winter months, the price of...

Question 29

An expenditure schedule in which the average outlay changes with the number of units purchased is called what?&#10;A)Block tariff&#10;B)Nonlinear outlay schedule&#10;C)Average expenditure&#10;D)Usage charges

Accepted Answer

The answer of An expenditure schedule in which the average...

Question 30

Some of the theme parks in Orlando, Florida offer lower entry rates or annual passes for Florida residents. Although this is not illegal, it is an example of:&#10;A)price gouging.&#10;B)first-degree price discrimination.&#10;C)second-degree price discrimination.&#10;D)third-degree price discrimination.

Accepted Answer

The answer of Some of the theme parks in Orlando,...

Question 31

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Accepted Answer

The answer of 11eb9f96_6e02_a61c_99ce_0dafd1c13091_TB8502_00...

Question 32

A block tariff is a form of:&#10;A)first-degree price discrimination&#10;B)second-degree price discrimination&#10;C)third-degree price discrimination&#10;D)tying

Accepted Answer

The answer of A block tariff is a form of:&#10;A)first-degree...

Question 33

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Accepted Answer

The answer of 11eb9f96_6e03_1b4e_99ce_d7cdbcfcaf66_TB8502_00...

Question 34

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.&#10;A)intemporal price discrimination&#10;B)tie-in-sales&#10;C)first degree discrimination&#10;D)second degree discrimination

Accepted Answer

The answer of Electricity prices may be an example of...

Question 35

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Accepted Answer

The answer of 11eb9f96_6e04_05b1_99ce_819ff6f2cb68_TB8502_00...

Question 36

Which of the following is not a real-world example of second-degree price discrimination?&#10;A)A pizza parlor sells large and small pizzas. Although the large pizzas are twice as big as the small pizzas, they cost less than double the price of a small pizza.&#10;B)An electric company sells &#34;blocks&#34; of power at different prices. Specifically, any customer who buys more that Q1 units of electricity can purchase additional units at a lower block price.&#10;C)Sam's Club&#174; 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.&#10;D)A movie theater charges senior citizens a cheaper price for movie tickets than it charges non-senior citizens for the same movie ticket.

Accepted Answer

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

Question 37

With ________ degree price discrimination, the firm identifies different consumer groups or segments in a market and charges each group a different price.&#10;A)first&#10;B)second&#10;C)third&#10;D)fourth

Accepted Answer

The answer of With ________ degree price discrimination, the firm...

Question 38

Which of the following is a real-world example of first-degree price discrimination?&#10;A)A pizza parlor sells large and small pizzas. Although the large pizzas are twice as big as the small pizzas, they cost less than double the price of a small pizza.&#10;B)An electric company sells &#34;blocks&#34; of power at different prices. Specifically, any customer who buys more that Q1 units of electricity can purchase additional units at a lower block price.&#10;C)Different prices are charged to different customers at a flea market.&#10;D)A movie theater charges senior citizens a cheaper price for movie tickets than it charges non-senior citizens for the same movie ticket.

Accepted Answer

The answer of Which of the following is a real-world...

Question 39

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Accepted Answer

The answer of 11eb9f96_6e02_a61d_99ce_230fd50b5e59_TB8502_00...

Question 40

When a movie theater charges a lower ticket price for senior citizens and/or students, the movie theater is engaging in:&#10;A)price gouging.&#10;B)third-degree price discrimination.&#10;C)first-degree price discrimination.&#10;D)second-degree price discrimination.

Accepted Answer

The answer of When a movie theater charges a lower...

Question 41

Bundling is a form of:&#10;A)first-degree price discrimination.&#10;B)second-degree price discrimination.&#10;C)third-degree price discrimination.&#10;D)tying.

Accepted Answer

The answer of Bundling is a form of:&#10;A)first-degree price discrimination.&#10;B)second-degree...

Question 42

Bundling can increase the seller's profits when customers have different _______ for the two products and when the firm __________________.&#10;A)supply curves; captures surplus.&#10;B)supply curves; cannot price discriminate.&#10;C)tastes; cannot price discriminate.&#10;D)tastes; can price discriminate.

Accepted Answer

The answer of Bundling can increase the seller's profits when...

Question 43

Bundling, in economic terms, is demonstrated by which of the following statements?&#10;A)Homemakers in the upper Midwest typically buy all of their families' winter clothing at the same time.&#10;B)When an economics professor assigns numerous readings to a class, he/she is practicing bundling.&#10;C)When you purchase a personal computer, it generally is already loaded with software and comes with a monitor, keyboard and mouse.&#10;D)Performing multiple tasks simultaneously in a work environment is an example of bundling.

Accepted Answer

The answer of Bundling, in economic terms, is demonstrated by...

Question 44

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

Accepted Answer

The answer of Suppose you own a business and your...

Question 45

A computer manufacturer sells computers and monitors separately. This manufacturer also allows consumers to choose any type of computer and any type of monitor and sells the two components as a package. This manufacturer is engaging in a ____________ pricing strategy.

A)tying
B)third-degree
C)mixed bundling
D)first-degree

Accepted Answer

The answer of A computer manufacturer sells computers and monitors...

Question 46

Mixed bundling is sometimes the most profitable strategy for a firm:&#10;A)because the firm can more accurately assess the reservation price of each consumer.&#10;B)because consumers prefer to spend in binges and make multiple purchases at the same time.&#10;C)when the firm has high delivery or shipping costs.&#10;D)because this strategy discourages a customer from buying a component when his/her willingness to pay is less than the marginal cost of a component of the purchase.

Accepted Answer

The answer of Mixed bundling is sometimes the most profitable...

Question 47

The reason that profit-maximizing firms willingly incur the added expense of advertising is that they hope that successful advertising will increase profits by:&#10;A)increasing average costs.&#10;B)increasing marginal costs.&#10;C)increasing supply.&#10;D)increasing demand.

Accepted Answer

The answer of The reason that profit-maximizing firms willingly incur...

Question 48

&#10;Use the table above. If the firm bundles the products, what single price should the firm charge for the bundle to maximize profit?&#10;A)600&#10;B)800&#10;C)1,000&#10;D)1,200

Accepted Answer

The answer of  &#10;Use the table above. If the...

Question 49

The firm's use of advertising is motivated:&#10;A)by its desire to capture more surplus through shifting the demand curve to the right for its products.&#10;B)by a desire to position itself in the marketplace as a monopolist.&#10;C)through media manipulation and really is not cost effective.&#10;D)only when the firm is in a perfectly competitive industry.

Accepted Answer

The answer of The firm's use of advertising is motivated:&#10;A)by...

Question 50

With tying:&#10;A)the firm tries to price each unit at the consumer's reservation price.&#10;B)the firm offers consumers a quantity discount.&#10;C)the firm charges different consumer groups or market segments a different price.&#10;D)a buyer can only purchase one product by agreeing to purchase some other product as well.

Accepted Answer

The answer of With tying:&#10;A)the firm tries to price each...

Question 51

Third-degree price discrimination is illegal.

Accepted Answer

The answer of Third-degree price discrimination is illegal....

Question 52

&#10;Use the table above. If the firm does not bundle the products, what single price should the firm charge for product B to maximize profit?&#10;A)100&#10;B)200&#10;C)300&#10;D)400

Accepted Answer

The answer of  &#10;Use the table above. If the...

Question 53

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. Interpret the advertising elasticity of demand.

A)A one-percent increase in advertising expenditures will stimulate demand by about five-hundredths of one percent.
B)A one-percent increase in advertising expenditures will stimulate demand by about five-tenths of one percent.
C)A one-percent increase in advertising expenditures will stimulate demand by about five percent.
D)A one-percent increase in advertising expenditures will stimulate demand by about one-fifth of one percent

Accepted Answer

The answer of You own a small bookstore. You have...

Question 54

Second-degree price discrimination refers to pricing differently for different market segments.

Accepted Answer

The answer of Second-degree price discrimination refers to pricing differently...

Question 55

In order to capture more surplus, the firm must have some market power.

Accepted Answer

The answer of In order to capture more surplus, the...

Question 56

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. What should your approximate advertising-to-sales ratio be?

A)

<strong>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. What should your approximate advertising-to-sales ratio be?</strong> A) of 1 percent. B)1 percent. C)3 percent. D)34 percent. <div style=padding-top: 35px>

of 1 percent.
B)1 percent.
C)3 percent.
D)34 percent.

Accepted Answer

The answer of You own a small bookstore. You have...

Question 57

Advertising is an example of a firm's:&#10;A)revenue-maximization strategy.&#10;B)pricing strategy.&#10;C)non-pricing strategy.&#10;D)price-discrimination strategy.

Accepted Answer

The answer of Advertising is an example of a firm's:&#10;A)revenue-maximization...

Question 58

&#10;Use the table above. If the firm does not bundle the products, what single price should the firm charge for product A to maximize profit?&#10;A)500&#10;B)800&#10;C)900&#10;D)1,000

Accepted Answer

The answer of  &#10;Use the table above. If the...

Question 59

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. What should your approximate advertising-to-sales ratio be?

A)

of 1 percent.
B)1 percent.
C)3 percent.
D)34 percent.

Accepted Answer

The answer of You own a small bookstore. You have...

Question 60

Which of the following is a real-world example of tying?&#10;A)A movie theater charges senior citizens a cheaper price for movie tickets than it charges non-senior citizens for the same movie ticket.&#10;B)Sam's Club&#174; 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.&#10;C)An airline charges more for a first-class ticket than for a coach ticket.&#10;D)The manufacturer of an instant-prints camera is the only manufacturer of the film that the camera uses.

Accepted Answer

The answer of Which of the following is a real-world...

Question 61

If a seller engages in second-degree price discrimination, the seller captures more producer surplus than with uniform pricing.

Accepted Answer

The answer of If a seller engages in second-degree price...

Question 62

An example of second-degree price discrimination is when you segment the market and charge individuals different prices for the same product or service based on their age.

Accepted Answer

The answer of An example of second-degree price discrimination is...

Question 63

Consider price discrimination. The firm must be able accurately forecast total sales.

Accepted Answer

The answer of Consider price discrimination. The firm must be...

Question 64

A damaged good strategy is an example of &#34;versioning&#34;.

Accepted Answer

The answer of A damaged good strategy is an example...

Deck 12: Capturing Surplus