Question : 11) Consider the following actions undertaken by a firm: a.charging the : 1387938

 

 

11) Consider the following actions undertaken by a firm:

a.charging the same price for products of different quality

b.charging different prices to different consumers for the same product when the variation cannot be explained by cost differences

c.charging different prices for products of different qualities

d.charging a lower price to match a competitor’s price

 

Which of the above will be considered price discrimination?

A) a, b, c, and d

B) a, b, and d only

C) b and d only

D) a and b only

 

 

12) Price discrimination is possible in which of the following market structures?

a.perfect competition

b.monopoly

c.oligopoly

d.monopolistic competition

A) a, b, c, and d

B) c and d only

C) b and c only

D) b, c, and d only

 

13) Which of the following undermines a firm’s ability to engage in price discrimination?

A) the seller’s market power

B) the inability to prevent resale of the product from one market segment to another

C) buyers having different elasticities of demand for the product

D) the seller’s ability to segment the total market

 

 

14) Which of the following firms is not able to practice price discrimination?

A) movie theaters

B) commercial airlines

C) land-line telephone companies

D) the largest wheat farmer in Nebraska

 

Table 16-2

 

Quantity Demanded in Middle Fall

(tubes per week)

Price per Tube

 

Quantity Demanded in West Fall

(tubes per week)

Price per Tube

 

1

$8

1

$5.00

2

  7

2

  4.50

3

  6

3

  4.00

4

  5

4

  3.50

5

  4

5

  3.00

 

Neem Products sells its Ayurvedic Neem toothpaste in two completely isolated markets with demand schedules as shown in Table 16-2. The average cost of production is constant at $2 per tube.

 

15) Refer to Table 16-2.  How many tubes of toothpaste will Neem sell in Middle Fall and at what price?

A) Q = 2 units; P = $7

B) Q = 3 units; P = $6

C) Q = 4 units; P = $5

D) Q = 5 units; P = $4

 

 

16) Refer to Table 16-2.  How many tubes of toothpaste will Neem sell in West Fall and at what price?

A) Q = 2 units; P = $4.50

B) Q = 3 units; P = $4

C) Q = 4 units; P = $3.50

D) Q = 5 units; P = $3

 

17) Refer to Table 16-2.  What is the total revenue received from both markets combined?

A) $30

B) $34

C) $68

D) $70

 

 

18) Refer to Table 16-2.  What are the total profits from both markets combined?

A) $50

B) $48

C) $18

D) $15

 

 

19) Refer to Table 16-2.  Which of the following statements is true about the two markets?

A) The demand in Middle Fall is more price elastic than the demand in West Fall.

B) The demand in Middle Fall is less price elastic than the demand in West Fall.

C) The demand in Middle Fall is more income elastic than the demand in West Fall.

D) The demand in Middle Fall is less income elastic than the demand in West Fall.

 

 

20) A firm that can effectively price discriminate will charge a higher price to

A) customers who have the more elastic demand for the product.

B) customers who have the more inelastic demand for the product.

C) buyers who belong to the largest market segment.

D) buyers who are members of the smallest market segment.