Question 1

Always There Wireless is wireless monopolist in a rural area.There are 200 customers,each of whom has a monthly demand curve for wireless minutes of Q^d = 200 - 100P,where P is the per-minute price in dollars and Q is the number of wireless minutes.The marginal cost of providing the wireless service is $0.25 per minute.If Always There charges $0.25 per minute,how large of a fixed monthly fee can it charge and still persuade customers to buy their service?

A) $200
B) $153.13
C) $306.25
D) $175

Accepted Answer

To find the fixed monthly fee that will persuade customers to buy their service, we need to set up the equation to find the break-even point, where the total revenue equals the total cost.

Total Revenue = (Price x Quantity) + Fixed Monthly Fee

Total Cost = Marginal Cost x Quantity

Let X be the fixed monthly fee, and P be the per-minute price.

At $0.25 per minute, the demand curve is:

Qd = 200 - 100P

Setting P = $0.25, we get:

Qd = 200 - 100($0.25) = 175

So the total revenue when charging $0.25 per minute is:

Total Revenue = $0.25 x 175 + X = $43.75 + X

The total cost is:

Total Cost = $0.25 x 175 = $43.75

Setting the total revenue equal to the total cost, we get:

$43.75 + X = $43.75 x 175

X = $43.75 x 175 - $43.75 = $153.13

Therefore, the largest fixed monthly fee Always There can charge to persuade customers to buy their service is $153.13.

The correct answer is B.

Question 2

Under perfect price discrimination the monopolist produces ________ a perfectly competitive market.&#10;A) the same amount of output as a non-discriminating monopolist as well as&#10;B) less output than an imperfectly price discriminating monopolist, but more than&#10;C) more output than an imperfectly price discriminating monopolist, but less than&#10;D) the same amount of output as would

Accepted Answer

Under perfect price discrimination, a monopolist is able to charge each consumer the maximum they are willing to pay, thus selling to every consumer whose valuation of the product is above the cost of production. This results in the monopolist producing the same amount of output as would be produced in a perfectly competitive market, where price equals marginal cost.

Question 3

Under a perfectly price discriminating monopolist,each consumer consumes ________ a perfectly competitive market.&#10;A) the same amount of output as they would under a non-discriminating monopolist as well as&#10;B) less output than they would under an imperfectly price discriminating monopolist, but more than under&#10;C) more output than they would under an imperfectly price discriminating monopolist, but less than under&#10;D) the same amount of output as they would under

Accepted Answer

Under a perfectly price discriminating monopolist, each consumer would pay a price equal to their willingness to pay for the product, resulting in maximum consumer surplus for each individual. As a result, each consumer would purchase the same amount of output as they would in a perfectly competitive market where the price equals the marginal cost of production. In contrast, under an imperfectly price discriminating monopolist, some consumers would pay a higher price than others based on their willingness to pay, resulting in some consumers purchasing less output than they would in a perfectly competitive market.

Question 4

Perfect price discrimination means:&#10;A) charging each consumer a price exactly equal to his or her willingness to pay.&#10;B) charging the exact same price to each consumer regardless of his or her willingness to pay.&#10;C) charging different prices to different consumers so as to maximize consumer surplus.&#10;D) charging each consumer a price exactly equal to the marginal cost of selling the good to that consumer.

Accepted Answer

Perfect price discrimination involves charging each consumer the highest price they are willing to pay for a product or service. This means that the seller can capture all of the consumer surplus that would otherwise be enjoyed by buyers in a less efficient market. Perfect price discrimination can be difficult to achieve in practice, but it is the optimal outcome from the perspective of the seller. Choice A describes perfect price discrimination, so it is the best answer.

Question 5

Always There Wireless is wireless monopolist in a rural area.There are 200 customers,each of whom has a monthly demand curve for wireless minutes of Q^d = 200 - 100P,where P is the per-minute price in dollars and Q is the number of wireless minutes.The marginal cost of providing the wireless service is $0.25 per minute.If Always There charges $0.50 per minute and the largest fixed fee that it can at that price,what is the difference in profit per customer compared to when it charges $0.25 per minute and the largest fixed fee that it can at that price?

A) Profit per customer is the same in both cases, and it is equal to zero.
B) Profit per customer is the same in both cases, and it is positive.
C) Profit is $3.13 per customer higher at a price of $0.50.
D) Profit is $3.13 per customer higher at a price of $0.25.

Accepted Answer

To find the profit per customer at each price, we need to use the following formula: Profit = Total Revenue - Total Cost At a price of $0.50 per minute, we first need to find the quantity demanded by customers. We can do this by setting Q^d equal to 0.50 and solving for Q: 200 - 100P = 0.50Q 100P = 200 - 0.50Q P = 2 - 0.005Q Now we can plug this price and quantity into the profit formula: Total Revenue = Price * Quantity = $0.50 * Q Total Cost = Marginal Cost * Quantity + Fixed Fee We know that the fixed fee charged must be the largest possible at this price, meaning that it must be high enough to make it just barely worthwhile for the customer to sign up. In other words, the fixed fee must be equal to the monopoly rent at this price. The monopoly rent is the amount that the customer is willing to pay above and beyond the cost of production, and it can be calculated as the area between the demand curve and the marginal cost curve up to the quantity demanded. To find the quantity demanded, we can plug in the price of $0.50 into the demand equation: Q = (200 - 100P) = 100 Now we can calculate the monopoly rent: Monopoly Rent = (1/2) * (200 - 0.25Q - 0.5Q) * Q = $37.50 This means that the fixed fee charged must be $37.50 per customer per month. Now we can calculate the profit per customer: Profit = Total Revenue - Total Cost = ($0.50 * Q) - ($0.25 * Q + $37.50) Profit = ($0.25 * Q) - $37.50 We know that Q = 100, so: Profit = ($0.25 * 100) - $37.50 = -$12.50 This means that Always There is actually losing money on each customer at a price of $0.50 and the maximum fixed fee. Now let's repeat the calculation for a price of $0.25 per minute: Q = (200 - 100P) = 150 Total Revenue = Price * Quantity = $0.25 * 150 = $37.50 Total Cost = Marginal Cost * Quantity + Fixed Fee = ($0.25 * 150) + $18.75 = $56.25 Profit = Total Revenue - Total Cost = $37.50 - $56.25 = -$18.75 Again, Always There is losing money on each customer. The difference in profit per customer between the two prices is: Profit at $0.50 - Profit at $0.25 = (-$12.50) - (-$18.75) = $6.25 So the correct answer is C, profit is $3.13 per customer higher at a price of $0.50.

Question 6

Always There Wireless is wireless monopolist in a rural area.There are 200 customers,each of whom has a monthly demand curve for wireless minutes of Q^d = 200 - 100P,where P is the per-minute price in dollars and Q is the number of wireless minutes.The marginal cost of providing the wireless service is $0.25 per minute.If Always There charges $0.50 per minute and the largest fixed fee that it can,what is Always There's total profit?

A) $30,625
B) $30,000
C) $37,500
D) $7,500

Accepted Answer

The answer of Always There Wireless is wireless monopolist in...

Question 7

A firm engages in price discrimination when it:&#10;A) charges different prices for different units of different goods.&#10;B) charges the same price for different units of the same good.&#10;C) charges a higher price for units for which the willingness to pay is high than for those units for which the willingness to pay is low.&#10;D) charges a lower price for units for which the willingness to pay is high than for those units for which the willingness to pay is low.

Accepted Answer

Price discrimination occurs when a firm charges different prices for the same product to different customers or groups of customers. Option C states that the firm charges a higher price for units for which the willingness to pay is high than for those units for which the willingness to pay is low, which is an example of price discrimination. Option A is incorrect because charging different prices for different units of different goods is not price discrimination. Option B is incorrect because charging the same price for different units of the same good is not price discrimination. Option D is incorrect because it is the opposite of price discrimination, where the firm would charge a higher price for units for which the willingness to pay is low than for those units for which the willingness to pay is high.

Question 8

When a firm charges more per ounce for a small bottle of ketchup than for a larger one,it is engaging in:&#10;A) price discrimination based on observable customer characteristics.&#10;B) perfect price discrimination.&#10;C) quantity-dependent pricing.&#10;D) two-part tariff pricing.

Accepted Answer

This is an example of quantity-dependent pricing, where the price per unit decreases as the quantity purchased increases. In this scenario, the price per ounce for the small bottle of ketchup is higher than the price per ounce for the larger one, encouraging consumers to purchase the larger size. This pricing strategy aims to increase the overall revenue by offering a discount to bulk buyers, while still charging a higher price per unit to smaller buyers. Option A is incorrect as it mentions observable customer characteristics and there is no such distinction made in the scenario. Option B is incorrect as it refers to perfect price discrimination, which involves charging each customer the maximum amount they are willing to pay, which is not the case here. Option D is incorrect as it refers to a pricing strategy where a fixed fee is charged in addition to a price per unit, which is not applicable in this scenario.

Question 9

With a two-part tariff:&#10;A) consumers simply pay a fixed fee if they buy anything at all.&#10;B) consumers pay a fixed fee if they buy anything at all, plus a separate per-unit price for each unit they buy.&#10;C) consumers pay a fixed fee if they buy anything at all, plus an annual fee for the right to purchase anything.&#10;D) consumers simply pay a fee for the right to buy anything.

Accepted Answer

In a two-part tariff, consumers pay a fixed fee if they buy anything at all, plus a separate per-unit price for each unit they buy. This allows the seller to capture a portion of the consumer surplus while still incentivizing them to buy more units. Option A, C, and D all involve fixed fees, but do not capture any portion of the consumer surplus.

Question 10

Price discrimination is based on observable customer characteristics:&#10;A) when a firm can distinguish consumers with a high versus low willingness to pay.&#10;B) when a firm offers a menu of alternatives, designed so that different customers will make different choices based on their willingness to pay.&#10;C) when a monopolist knows perfectly the customer's willingness to pay for each unit its sells and can charge a different price for each unit.&#10;D) in all cases.

Accepted Answer

Price discrimination is based on observable customer characteristics when a firm can distinguish consumers with a high versus low willingness to pay. In this case, the firm can charge different prices to different consumers based on their individual characteristics. This type of price discrimination is called "first-degree price discrimination" or "perfect price discrimination." It is the most efficient form of price discrimination because the firm can charge each consumer the maximum price they are willing to pay, thus capturing all of the consumer surplus.

Question 11

Price discrimination is based on self-selection:&#10;A) when a firm can distinguish consumers with a high versus low willingness to pay.&#10;B) when a firm offers a menu of alternatives, designed so that different customers will make different choices based on their willingness to pay.&#10;C) when a monopolist knows perfectly the customer's willingness to pay for each unit its sells and can charge a different price for each unit.&#10;D) when monopolists decide for themselves whether to engage in price discrimination.

Accepted Answer

The answer of Price discrimination is based on self-selection:&#10;A) when...

Question 12

Always There Wireless is wireless monopolist in a rural area.There are 200 customers,each of whom has a monthly demand curve for wireless minutes of Q^d = 200 - 100P,where P is the per-minute price in dollars and Q is the number of wireless minutes.The marginal cost of providing the wireless service is $0.25 per minute.If Always There charges $0.50 per minute and the largest fixed fee that it can,what is Always There's profit per customer?

A) $153.13
B) $150.00
C) $187.50
D) $37.50

Accepted Answer

The answer of Always There Wireless is wireless monopolist in...

Question 13

Always There Wireless is wireless monopolist in a rural area.There are 200 customers,each of whom has a monthly demand curve for wireless minutes of Q^d = 200 - 100P,where P is the per-minute price in dollars and Q is the number of wireless minutes.The marginal cost of providing the wireless service is $0.25 per minute.If Always There charges $0.25 per minute and the largest fixed fee that it can,what is Always There's profit per customer?

A) $153.13
B) $196.88
C) $200
D) $175

Accepted Answer

The answer of Always There Wireless is wireless monopolist in...

Question 14

A telephone company that charges both a monthly fee plus a price per minute used are employing:&#10;A) price discrimination based on observable customer characteristics.&#10;B) perfect price discrimination.&#10;C) a two-part tariff.&#10;D) the profit-maximizing rule.

Accepted Answer

The answer of A telephone company that charges both a...

Question 15

Always There Wireless is wireless monopolist in a rural area.There are 200 customers,each of whom has a monthly demand curve for wireless minutes of Q^d = 200 - 100P,where P is the per-minute price in dollars and Q is the number of wireless minutes.The marginal cost of providing the wireless service is $0.25 per minute.If Always There charges $0.25 per minute and the largest fixed fee that it can,what is Always There's total profit?

A) $30,625
B) $39,375
C) $40,000
D) $35,000

Accepted Answer

The answer of Always There Wireless is wireless monopolist in...

Question 16

Always There Wireless is wireless monopolist in a rural area.There are 200 customers,each of whom has a monthly demand curve for wireless minutes of Q^d = 200 - 100P,where P is the per-minute price in dollars and Q is the number of wireless minutes.The marginal cost of providing the wireless service is $0.25 per minute.If Always There charges $0.25 per minute,how many minutes will each customer buy each month?

A) 175
B) 200
C) 2
D) 225

Accepted Answer

The answer of Always There Wireless is wireless monopolist in...

Question 17

A monopolist can perfectly price discriminate:&#10;A) when it can distinguish consumers with a high versus low willingness to pay.&#10;B) when it offers a menu of alternatives, designed so that different customers will make different choices based on their willingness to pay.&#10;C) if it knows perfectly the customer's willingness to pay for each unit its sells and can charge a different price for each unit.&#10;D) whenever it chooses to as a result of its market power.

Accepted Answer

The answer of A monopolist can perfectly price discriminate:&#10;A) when...

Question 18

Always There Wireless is wireless monopolist in a rural area.There are 200 customers,each of whom has a monthly demand curve for wireless minutes of Q^d = 200 - 100P,where P is the per-minute price in dollars and Q is the number of wireless minutes.The marginal cost of providing the wireless service is $0.25 per minute.If Always There charges $0.50 per minute,how many minutes will each customer buy each month?

A) 200
B) 150
C) 175
D) 250

Accepted Answer

The answer of Always There Wireless is wireless monopolist in...

Question 19

Always There Wireless is wireless monopolist in a rural area.There are 200 customers,each of whom has a monthly demand curve for wireless minutes of Q^d = 200 - 100P,where P is the per-minute price in dollars and Q is the number of wireless minutes.The marginal cost of providing the wireless service is $0.25 per minute.If Always There charges $0.50 per minute and the largest fixed fee that it can at that price,what is the difference in total profit compared to when it charges $0.25 per minute and the largest fixed fee that it can at that price?

A) Profit is the same in both cases, and it is equal to zero.
B) Profit is the same in both cases, and it is negative.
C) Profit is $626 higher at a price of $0.50.
D) Profit is $626 higher at a price of $0.25.

Accepted Answer

The answer of Always There Wireless is wireless monopolist in...

Question 20

Always There Wireless is wireless monopolist in a rural area.There are 200 customers,each of whom has a monthly demand curve for wireless minutes of Q^d = 200 - 100P,where P is the per-minute price in dollars and Q is the number of wireless minutes.The marginal cost of providing the wireless service is $0.25 per minute.If Always There charges $0.50 per minute,how large of a fixed monthly fee can it charge and still persuade customers to buy their service?

A) $200
B) $150
C) $225
D) $112.50

Accepted Answer

The answer of Always There Wireless is wireless monopolist in...

Question 21

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.What is the highest fixed fee Always There Wireless could charge without losing the low-demand consumers?

A) $28.13
B) $56.26
C) $24.50
D) $49.00

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 22

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.How many minutes will high-demand consumers purchase?

A) 60
B) 30
C) 70
D) 170

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 23

A movie monopolist sells to students and adults.The demand function for students is Q^d_S = 600 - 100P and the demand function for adults is Q^d_A = 1,200 - 100P.The marginal cost is $2 per ticket.Suppose the movie theater can price discriminate.What is the monopolist's profit from both students and adults?

A) $2,900
B) $2,500
C) $2,100
D) $4,900

Accepted Answer

The answer of A movie monopolist sells to students and...

Question 24

A movie monopolist sells to students and adults.The demand function for students is Q^d_S = 600 - 100P and the demand function for adults is Q^d_A = 1,200 - 100P.The marginal cost is $2 per ticket.Suppose the movie theater can price discriminate.How many tickets does the theater sell to adults to maximize profits?

A) 2500
B) 500
C) 200
D) 600

Accepted Answer

The answer of A movie monopolist sells to students and...

Question 25

If a monopoly is price discriminating between two groups,A and B,based on observable customer characteristics,there is no difference in the marginal cost of selling to the two groups,and the elasticity of demand for group A is -1.5 while the elasticity of demand for group B is -2.1,which of the following is true?

A) The markup and price for group A customers will be higher than for group B customers.
B) The markup and price for group B customers will be higher than for group A customers.
C) The markup for group A customers will be higher than for group B customers, but there is not enough information to determine which price will be higher.
D) The price for group A customers will be higher than for group B customers, but there is not enough information to determine which markup will be higher.

Accepted Answer

The answer of If a monopoly is price discriminating between...

Question 26

A movie monopolist sells to students and adults.The demand function for students is Q^d_S = 600 - 100P and the demand function for adults is Q^d_A = 1,200 - 100P.The marginal cost is $2 per ticket.Suppose the movie theater can price discriminate.What is the monopolist's profit from adults?

A) $400
B) $2,400
C) $2,500
D) $0

Accepted Answer

The answer of A movie monopolist sells to students and...

Question 27

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.25 per minute.If Always There Wireless charges the highest fixed fee that it can without losing the low-demand consumers,what are the profits from sales to each of the low-demand consumers?

A) $9.38
B) $28.13
C) $153.13
D) $1.00

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 28

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.25 per minute.How many minutes will low-demand consumers purchase?

A) 75
B) 175
C) 200
D) 100

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 29

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.25 per minute.How many minutes will high-demand consumers purchase?

A) 75
B) 175
C) 200
D) 100

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 30

A movie monopolist sells to students and adults.The demand function for students is Q^d_S = 600 - 100P and the demand function for adults is Q^d_A = 1,200 - 100P.The marginal cost is $2 per ticket.Suppose the movie theater can price discriminate.How many tickets does the theater sell to students to maximize profits?

A) 2500
B) 500
C) 200
D) 600

Accepted Answer

The answer of A movie monopolist sells to students and...

Question 31

A movie monopolist sells to students and adults.The demand function for students is Q^d_S = 600 - 100P and the demand function for adults is Q^d_A = 1,200 - 100P.The marginal cost is $2 per ticket.Suppose the movie theater can price discriminate.How many tickets does the theater sell to students to maximize profits?

A) 2500
B) 500
C) 200
D) 600

Accepted Answer

The answer of A movie monopolist sells to students and...

Question 32

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.25 per minute.How much can Always There Wireless charge as a fixed fee without losing the low-demand consumers?

A) $9.38
B) $28.13
C) $153.13
D) $1.00

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 33

A movie monopolist sells to students and adults.The demand function for students is Q^d_S = 600 - 100P and the demand function for adults is Q^d_A = 1,200 - 100P.The marginal cost is $2 per ticket.What is the difference in the monopolist's profit when it is able to price discriminate and when it cannot?

A) $2,500
B) $450
C) $0
D) $50

Accepted Answer

The answer of A movie monopolist sells to students and...

Question 34

A movie monopolist sells to students and adults.The demand function for students is Q^d_S = 600 - 100P and the demand function for adults is Q^d_A = 1,200 - 100P.The marginal cost is $2 per ticket.Suppose the movie theater can price discriminate.What is the monopolist's profit from adults?

A) $400
B) $2,400
C) $2,500
D) $0

Accepted Answer

The answer of A movie monopolist sells to students and...

Question 35

A movie monopolist sells to students and adults.The demand function for students is Q^d_S = 600 - 100P and the demand function for adults is Q^d_A = 1,200 - 100P.The marginal cost is $2 per ticket.Suppose the movie theater can price discriminate.What is the monopolist's profit from both students and adults?

A) $2,900
B) $2,500
C) $2,100
D) $4,900

Accepted Answer

The answer of A movie monopolist sells to students and...

Question 36

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.How many minutes will low-demand consumers purchase?

A) 60
B) 30
C) 70
D) 170

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 37

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.25 per minute.What are Always There Wireless's total profits?

A) $3,750
B) $11,250
C) $61,250
D) $400

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 38

A movie monopolist sells to students and adults.The demand function for students is Q^d_S = 600 - 100P and the demand function for adults is Q^d_A = 1,200 - 100P.The marginal cost is $2 per ticket.Suppose the movie theater can price discriminate.How many tickets does the theater sell to adults to maximize profits?

A) 2500
B) 500
C) 200
D) 600

Accepted Answer

The answer of A movie monopolist sells to students and...

Question 39

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.25 per minute.If Always There Wireless charges the highest fixed fee that it can without losing the low-demand consumers,what are the profits from sales to each of the high-demand consumers?

A) $9.38
B) $28.13
C) $153.13
D) $1.00

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 40

If a monopoly is price discriminating between two groups,A and B,based on observable customer characteristics,there is no difference in the marginal cost of selling to the two groups,and the elasticity of demand for group A is -1.5 while the elasticity of demand for group B is -2.1,which of the following is true?

A) The markup and price for group A customers will be higher than for group B customers.
B) The markup and price for group B customers will be higher than for group A customers.
C) The markup for group A customers will be higher than for group B customers, but there is not enough information to determine which price will be higher.
D) The price for group A customers will be higher than for group B customers, but there is not enough information to determine which markup will be higher.

Accepted Answer

The answer of If a monopoly is price discriminating between...

Question 41

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.If Always There Wireless charges the highest fixed fee that it can without losing the low-demand consumers,what is Always There Wireless's total profit?

A) $11,200
B) $13,200
C) $11,700
D) $12,700

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 42

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.How many minutes will high-demand consumers purchase?

A) 60
B) 30
C) 70
D) 170

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 43

Discuss the differences between perfect and imperfect price discrimination and the benefits of each to a monopolist.

Accepted Answer

The answer of Discuss the differences between perfect and imperfect...

Question 44

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.25 per minute.If Always There Wireless charges the highest fixed fee that it can without losing the low-demand consumers,what are the profits from sales to each of the low-demand consumers?

A) $9.38
B) $28.13
C) $153.13
D) $1.00

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 45

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.35 per minute.What is the highest fixed fee Always There Wireless can charge without losing the low-demand consumers?

A) $21.13
B) $42.25
C) $28.13
D) $136.13

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 46

Bundling:&#10;A) is the practice of selling a single product in bulk at a reduced per unit price.&#10;B) is the practice of selling several products together as a package.&#10;C) is the practice of selling the same good to different types of consumers at different prices.&#10;D) is the practice of selling different goods to different types of consumers at different prices.

Accepted Answer

The answer of Bundling:&#10;A) is the practice of selling a...

Question 47

Bundling always increases a multi-product monopolist's profit:&#10;A) whenever the marginal rate of substitution is decreasing.&#10;B) whenever an increase of a dollar in the willingness to pay for one good implies an increase of a dollar in the willingness to pay for another good and the marginal cost is zero.&#10;C) when doing so does not alter consumers' willingness to pay for the bundle and the monopolist can extract all of aggregate surplus as profit.&#10;D) if and only if the monopolist is also perfectly price discriminating.

Accepted Answer

The answer of Bundling always increases a multi-product monopolist's profit:&#10;A)...

Question 48

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.If Always There Wireless charges the highest fixed fee that it can without losing the low-demand consumers,what is the profit from sales to each of the low-demand consumers?

A) $28.00
B) $24.50
C) $33.00
D) $28.13

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 49

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.35 per minute.If Always There Wireless charges the highest fixed fee that it can without losing the low-demand consumers,what is Always There Wireless's profit from sales for each high-demand consumer?

A) $27.63
B) $37.63
C) $21.13
D) $28.13

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 50

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.If Always There Wireless charges the highest fixed fee that it can without losing the low-demand consumers,what is Always There Wireless's total profit?

A) $11,200
B) $13,200
C) $11,700
D) $12,700

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 51

Firms bundle their products because:&#10;A) it is technologically efficient to do so.&#10;B) it can increase a firm's ability to extract consumer surplus.&#10;C) it can increase a firm's profits.&#10;D) All of these are reasons firms bundle their products.

Accepted Answer

The answer of Firms bundle their products because:&#10;A) it is...

Question 52

Mixed bundling:&#10;A) is the practice of selling several products together as a package.&#10;B) is the practice of selling the same good to different types of consumers at different prices.&#10;C) is the practice of selling several products together as a package while also offering those products for sale individually.&#10;D) is the practice of selling goods in bulk at a reduced per unit price.

Accepted Answer

The answer of Mixed bundling:&#10;A) is the practice of selling...

Question 53

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.What is the highest fixed fee Always There Wireless could charge without losing the low-demand consumers?

A) $28.13
B) $56.26
C) $24.50
D) $49.00

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 54

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.35 per minute.If Always There Wireless charges the highest fixed fee that it can without losing the low-demand consumers,what is Always There Wireless's profit from sales for each high-demand consumer?

A) $27.63
B) $37.63
C) $21.13
D) $28.13

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 55

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.How many minutes will low-demand consumers purchase?

A) 60
B) 30
C) 70
D) 170

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Question 56

Explain bundling and mixed bundling and the benefits to a multi-product monopolist of such packaging schemes.

Accepted Answer

The answer of Explain bundling and mixed bundling and the...

Question 57

Suppose Always There Wireless serves 100 high-demand wireless consumers,who each have a monthly demand curve for wireless minutes of Q^d_H = 200 - 100P,and 300 low-demand consumers,who each have a monthly demand curve for wireless minutes of Q^d_L = 100 - 100P,where P is the per-minute price in dollars.The marginal cost is $0.25 per minute.Suppose Always There Wireless charges $0.30 per minute.What is the highest fixed fee Always There Wireless could charge without losing the low-demand consumers?

A) $28.13
B) $56.26
C) $24.50
D) $49.00

Accepted Answer

The answer of Suppose Always There Wireless serves 100 high-demand...

Deck 18: Pricing Policies