Question 1

The city bus system charges lower fares to senior citizens than to other passengers.Assuming that this pricing strategy increases the profits of the bus system, we can conclude that senior citizens must have a for bus service than other passengers.
A.greater demand
B.lower demand
C.more elastic demand
D.less elastic demand

Accepted Answer

Senior citizens likely have a more elastic demand for bus service, meaning their demand is more sensitive to price changes. Lower fares for seniors likely attract more of them to use the service, increasing overall profits if their demand significantly responds to the lower prices.

Question 2

If a monopolist can engage in perfect price discrimination, then:
A.it produces at the socially efficient level.
B.consumer surplus is maximized.
C.producer surplus is minimized.
D.the government may impose fines on the monopolist.

Accepted Answer

The answer of If a monopolist can engage in perfect...

Question 3

Price discrimination leads to a ________ price for consumers with a demand.
A.higher; more elastic
B.higher; perfectly elastic
C.lower; more elastic
D.lower; less elastic

Accepted Answer

The answer of Price discrimination leads to a ________ price...

Question 4

Because tourist demand for airline flights is relatively ________, small in ticket
price will result in relatively in additional tourists.
A.inelastic; reductions; small increases
B.elastic; reductions; large increases
C.inelastic; increases; small decreases
D.elastic; increases; small increases

Accepted Answer

Tourist demand for airline flights is considered elastic, meaning that small reductions in ticket price can lead to large increases in the number of tourists choosing to fly, as the demand is sensitive to price changes.

Question 5

Which of the following is not an example of price discrimination?
A.College students receive a discount at the ice cream store when they show their college ID cards.
B.Ladies receive free admission into a nightclub, while men must pay a cover charge.
C.A country club requires members to pay annual dues, but members receive discounted prices to golf.
D.Street vendors increase the price of umbrellas when it is raining.

Accepted Answer

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

Question 6

A local community college charges lower tuition fees to local town residents than to nonresidents.This pricing strategy increases the profits of the community college.Using this information, we can conclude that nonresidents must have a for attending the
community college than residents.
A.less price-elastic demand
B.greater demand
C.lower demand
D.more price-elastic demand

Accepted Answer

The answer of A local community college charges lower tuition...

Question 7

Price-discriminating firms will impose a price structure that offers customers with a ________
demand a ________ price and offers customers with a(n) ________ demand a ________
price.
A.less elastic; lower; more elastic; higher
B.less elastic; higher; more elastic; lower
C.lower; higher; higher; lower
D.seasonal; lower; unchanging; higher

Accepted Answer

Price-discriminating firms aim to charge higher prices to customers with more elastic demand and lower prices to customers with less elastic demand. This is because customers with inelastic demand are willing to pay a higher price for the product, while customers with elastic demand will only purchase the product if the price is low enough. Therefore, choice B is the correct answer, as it offers a higher price to customers with more elastic demand and a lower price to customers with less elastic demand.

Question 8

To practice effective price discrimination, a monopolist must be able to:
A.estimate its own production and cost functions.
B.avoid detection by government regulatory agencies.
C.prevent the resale of goods among groups of buyers.
D.calculate the utility level of each buyer in the market.

Accepted Answer

The answer of To practice effective price discrimination, a monopolist...

Question 9

Suppose a monopoly can separate its customers into two groups.If the monopoly practices price discrimination, it will charge the lower price to the group with:
A.the higher price elasticity of demand.
B.the lower price elasticity of demand.
C.the fewer close substitutes.
D.The answer cannot be determined with the information given.

Accepted Answer

A monopoly will charge a lower price to the group with the higher price elasticity of demand because this group is more sensitive to price changes, meaning they would significantly reduce their quantity demanded if prices were higher.

Question 10

Because business travelers' demand for airline flights is relatively , small increases
in price will result in relatively in additional business travelers.
A.price-inelastic; small decreases
B.price-elastic; large decreases
C.price-inelastic; large decreases
D.price-elastic; small decreases

Accepted Answer

The answer of Because business travelers' demand for airline flights...

Question 11

Many hotel chains offer discounts for senior citizens.This is an example of that is
________ in the United States.
A.market power; illegal
B.single-price monopoly power; legal
C.price discrimination; illegal
D.price discrimination; legal

Accepted Answer

The answer of Many hotel chains offer discounts for senior...

Question 12

The municipal swimming pool charges lower entrance fees to local residents than to nonresidents.Assuming that this pricing strategy increases the profits of the pool, we can conclude that nonresidents must have a for swimming at the pool than residents.
A.greater demand
B.lower demand
C.more elastic demand
D.less elastic demand

Accepted Answer

The answer of The municipal swimming pool charges lower entrance...

Question 13

A price-discriminating firm will adjust prices so that customers with more demand
pay ________ prices than (as) those customers with elastic demand.
A.inelastic; lower; less
B.elastic; lower; less
C.elastic; the same; more
D.elastic; higher; less

Accepted Answer

The answer of A price-discriminating firm will adjust prices so...

Question 14

Price discrimination leads to a ________ price for consumers with a demand.
A.higher; less elastic
B.higher; more elastic
C.higher; perfectly elastic
D.lower; less elastic

Accepted Answer

Price discrimination is the practice of charging different prices to different customers for the same good or service. When firms engage in price discrimination, they are able to charge a higher price to customers with less elastic demand because these customers are less likely to be deterred by higher prices. Conversely, firms are forced to charge a lower price to customers with more elastic demand because these customers are more sensitive to changes in price and are more likely to switch to a substitute product if the price of the original good or service becomes too high. Therefore, price discrimination leads to a higher price for consumers with less elastic demand.

Question 15

The main reason a monopoly engages in price discrimination is that:
A.it wants to discriminate against a particular ethnic group.
B.doing so increases its profits.
C.it wants to discourage potential competitors.
D.by charging a lower price to some people, it may succeed in discouraging efforts to regulate it.

Accepted Answer

The answer of The main reason a monopoly engages in...

Question 16

A Japanese steel firm sells steel in the United States and in Japan.Since the United States buys steel from a number of sources, the U.S.demand for Japanese steel is more price- elastic than the Japanese demand for Japanese steel.If the Japanese steel firm wishes to maximize its profits, it should:
A)charge the same price in both countries (after adjusting for transportation costs).
B)charge a higher price in the United States and a lower price in Japan; otherwise it would be accused of unfair trade practices.
C)charge a lower price in the United States and a higher price in Japan.
D)figure out which market is more profitable and sell only in that market.

Accepted Answer

Since the demand for Japanese steel is more price-elastic in the United States, the firm can increase its sales in the U.S. market by charging a lower price. On the other hand, the Japanese demand for Japanese steel is less price-elastic, so the firm can charge a higher price in Japan. By engaging in price discrimination, the Japanese steel firm can increase its profits. The price elasticity of demand for Japanese steel will be higher in the United States than in Japan. Therefore, the Japanese steel firm should charge a lower price in the United States and a higher price in Japan to maximize its profits. This is because if the firm charges the same price in both countries, it may lose out on potential profits in the U.S. market due to competition from other sources, while charging a higher price in the United States would likely result in lower demand. Additionally, the firm would not necessarily be accused of unfair trade practices for charging different prices in different markets.

Question 17

Suppose the price elasticity of demand for coffee at the CoffeeBarn equals 1.71 for women and 0.55 for men.A successful price discrimination strategy would lead to:
A.lower prices for men and women.
B.lower prices for men and higher prices for women.
C.lower prices for men and higher prices for women as long as the CoffeeBarn could prevent men from reselling drinks to women.
D.higher prices for men and lower prices for women as long as the CoffeeBarn could prevent women from reselling drinks to men.

Accepted Answer

The answer of Suppose the price elasticity of demand for...

Question 18

In order to maximize profits, an airline will offer ________ prices to customers with ________
demand.
A.higher; inelastic
B.higher; elastic
C.lower; inelastic
D.the lowest; the least

Accepted Answer

The answer of In order to maximize profits, an airline...

Question 19

Amtrak charges lower fares to students than to its other passengers.This pricing strategy increases Amtrak's profits.From this information, we can conclude that students must have a
________ for Amtrak train service than other passengers.
A.more price-elastic demand
B.lower demand
C.greater demand
D.less price-elastic demand

Accepted Answer

The answer of Amtrak charges lower fares to students than...

Question 20

Which of the following statements is correct for a firm that can price-discriminate?
A.It should adjust prices so that customers with price-inelastic demand pay lower prices than those with elastic demand.
B.It should adjust prices so that customers with price-inelastic demand pay higher prices than those with elastic demand.
C.It should adjust prices so that customers with price-elastic demand pay lower prices than those with inelastic demand.
D.It should adjust prices so that customers with price-elastic demand pay higher prices than those with inelastic demand.

Accepted Answer

The answer of Which of the following statements is correct...

Quiz 13: Monopoly

If a monopolist can engage in perfect price discrimination, then: A.it produces at the socially efficient level. B.consumer surplus is maximized. C.producer surplus is minimized. D.the government may impose fines on the monopolist.

Price discrimination leads to a ________ price for consumers with a demand. A.higher; more elastic B.higher; perfectly elastic C.lower; more elastic D.lower; less elastic

Because tourist demand for airline flights is relatively ________, small in ticket price will result in relatively in additional tourists. A.inelastic; reductions; small increases B.elastic; reductions; large increases C.inelastic; increases; small decreases D.elastic; increases; small increases

To practice effective price discrimination, a monopolist must be able to: A.estimate its own production and cost functions. B.avoid detection by government regulatory agencies. C.prevent the resale of goods among groups of buyers. D.calculate the utility level of each buyer in the market.

Because business travelers' demand for airline flights is relatively , small increases in price will result in relatively in additional business travelers. A.price-inelastic; small decreases B.price-elastic; large decreases C.price-inelastic; large decreases D.price-elastic; small decreases

Many hotel chains offer discounts for senior citizens.This is an example of that is ________ in the United States. A.market power; illegal B.single-price monopoly power; legal C.price discrimination; illegal D.price discrimination; legal

A price-discriminating firm will adjust prices so that customers with more demand pay ________ prices than (as) those customers with elastic demand. A.inelastic; lower; less B.elastic; lower; less C.elastic; the same; more D.elastic; higher; less

Price discrimination leads to a ________ price for consumers with a demand. A.higher; less elastic B.higher; more elastic C.higher; perfectly elastic D.lower; less elastic

A Japanese steel firm sells steel in the United States and in Japan.Since the United States buys steel from a number of sources, the U.S.demand for Japanese steel is more price- elastic than the Japanese demand for Japanese steel.If the Japanese steel firm wishes to maximize its profits, it should:

In order to maximize profits, an airline will offer prices to customers with demand. A.higher; inelastic B.higher; elastic C.lower; inelastic D.the lowest; the least