Question : 16.4   Price Discrimination 1) To be able to price discriminate, a : 1226211

16.4   Price Discrimination

1) To be able to price discriminate, a firm must

A) lower prices for all customers.

B) raise prices for all customers.

C) be able to identify and separate different types of buyers.

D) sell a product that can be resold.

E) Both answers B and C are correct.

2) Which of the following must exist for a firm to engage in price discrimination?

A) The firm must be able to identify and separate its buyers into different classes, and the low-price buyers cannot resell the product to the high-price buyers.

B) The firm must face an inelastic demand.

C) The firm must be able to realize economies of scale.

D) The firm must have no more than one class of buyer.

E) The firm must be a natural monopoly.

3) A price-discriminating monopoly charges

A) the same price to every buyer for the same product.

B) a different price to different types of buyers for the same product, even though there are no differences in costs.

C) a different price to different buyers, because the costs are different.

D) different prices to buyers for different products.

E) each customer a price that equals the marginal cost of serving that customer.

4) Price discrimination is possible, in part, because

A) costs of production vary as output increases.

B) monopolies are regulated.

C) monopolies don’t profit maximize.

D) the willingness to pay can vary among groups of buyers.

E) monopolies face horizontal demand curves.

5) Arnie’s Airlines is a monopoly airline that is able to price discriminate. If Arnie’s decides to price discriminate, then

A) Arnie’s profit decreases.

B) consumer surplus decreases.

C) Arnie’s revenues decrease.

D) Arnie’s sells fewer tickets.

E) Arnie’s will see all of his tickets at a single price.

6) With price discrimination, a monopoly

A) converts consumer surplus into economic profit.

B) converts producer surplus into economic profit.

C) can charge a single price to all customers.

D) produces less output than if it does not price discriminate.

E) converts consumer surplus into deadweight loss.

7) One way a monopoly can convert additional consumer surplus into economic profit is to

A) lower prices.

B) raise prices.

C) price discriminate.

D) become more competitive.

E) produce where price equals average total cost.

8) An airline company

A) cannot price discriminate because it is against the law.

B) price discriminates by charging higher prices to business travelers.

C) price discriminates by charging lower prices to business travelers.

D) price discriminates even though its profits are lower because competition forces it to do so.

E) has fewer customers because it price discriminates than it would have if it did not price discriminate.

9) A price-discriminating monopoly

A) sells a larger quantity than it would if it were a single-price monopoly.

B) is illegal.

C) cannot offer discounts.

D) cannot control the price of its product.

E) makes a smaller economic profit than it would if it were a single-price monopoly.

10) Compared to setting a single price, if a firm can price discriminate it

A) makes a larger economic profit.

B) makes a lower economic profit.

C) makes zero economic profit.

D) has no change in its economic profit from when it set a single price.

E) might increase, decrease, or not change its economic profit depending on whether as a single-price monopoly its marginal revenue curve was above, below, or the same as its demand curve.