Question : 111) Refer to Figure 10-5. Assume this pharmaceutical firm has : 1384245

111) Refer to Figure 10-5. Assume this pharmaceutical firm has no fixed costs and is practicing perfect price discrimination among its buyers. At its profit-maximizing level of output, it will generate a total profit represented by

A) areas B+C+F+G+H+I.

B) areas C+F+H.

C) areas G+I.

D) the area below the demand curve minus the area below the MC curve, up to Q1.

E) It is not possible to determine with the information provided.

112) Refer to Figure 10-5. Suppose this pharmaceutical firm is charging a single price for its drug and is maximizing its profits. If it then begins to perfectly price discriminate among its buyers it will

A) cause a loss of economic surplus to society as a whole.

B) capture consumer surplus equal to areas D+E+C+F+H.

C) no longer be equating MR and MC.

D) reduce its producer surplus by areas C+F+H.

E) decrease its total output.

113) Consider a monopolist that is able to distinguish between two distinct market segments, A and B, for its product.  Marginal cost is constant at $18 for each unit produced.  The firm is currently selling its output at a single price and allocating its output across segments such that marginal revenue in segment A is $25 and marginal revenue in segment B is $15.  Is this firm maximizing its profit?

A) Yes, because it has set a price such that MC is between the MRs of the two market segments.

B) No, because it is only possible to equate MR and MC when there is a single MR curve.

C) Yes, because since marginal cost is constant, the firm must set a single price.

D) No, this firm can increase its profits by price discriminating across the two market segments.

114) Consider a monopolist that is able to distinguish between two distinct market segments, A and B, for its product.  Marginal cost is constant at $18 for each unit produced.  The firm is currently selling its output at a single price and allocating its output across segments such that marginal revenue in segment A is $25 and marginal revenue in segment B is $15.  How can this firm maximize its profit?

A) increase the output in segment A and decrease the output in segment B

B) increase the output in segments A and B

C) decrease the output in segment A and increase the output in segment B

D) decrease the output in segments A and B

E) maintain the current output and its allocation across segments

115) Consider a monopolist that is able to distinguish between two distinct market segments, A and B, for its product.  Marginal cost is constant at $100 for each unit produced.  The firm is currently selling its output at a single price and allocating its output across segments such that marginal revenue in segment A is $85 and marginal revenue in segment B is $105.  Is this firm maximizing its profit?

A) Yes, because it has set a price such that MC is between the MRs of the two market segments.

B) No, because it is only possible to equate MR and MC when there is a single MR curve.

C) Yes, because since marginal cost is constant, the firm must set a single price.

D) No, this firm can increase its profits by price discriminating across the two market segments.

116) Consider a monopolist that is able to distinguish between two distinct market segments, A and B, for its product.  Marginal cost is constant at $100 for each unit produced.  The firm is currently selling its output at a single price and allocating its output across segments such that marginal revenue in segment A is $85 and marginal revenue in segment B is $105.  How can this firm maximize its profit?

A) increase the output in segment A and decrease the output in segment B

B) increase the output in segments A and B

C) decrease the output in segment A and increase the output in segment B

D) decrease the output in segments A and B

E) maintain the current output and its allocation across segments

117) With regard to price discrimination, we can generally say that a monopolist practicing perfect price discrimination ________ a single-price monopolist in the same market.

A) produces a lower level of output compared to

B) generates more consumer surplus than

C) generates a more efficient outcome for society as a whole compared to

D) produces the same output level and charges the same price as

E) has the same effects on consumer welfare as

118) Many clothing retailers allow you to go to their website and print a coupon that you then present for a discounted price on your next purchase in the store. In economics we refer to this as

A) a created entry barrier, a form of price discrimination.

B) hurdle pricing, a form of price discrimination.

C) sales maximization, a form of market segmentation.

D) a loss-leader, a form of advertising.

E) arbitrage, a form of price discrimination.

119) Suppose you go to a retailer’s website and print a coupon that gives you a discount on your next purchase at their store.  But your friend, who also plans to purchase there, can’t be bothered. You are revealing to the store that

A) you have a lower income than your friend.

B) you understand price discrimination and your friend does not.

C) you have a lower elasticity of demand than your friend.

D) you have a higher elasticity of demand than your friend.

E) elasticity of demand changes according to the size of the discount offered.

120) Consider the following statement: “Price discrimination is harmful to society and should not be tolerated under any circumstance.” Why is this statement false?

A) Price discrimination always leads to lower prices and higher quantities.

B) Price discrimination can allow for some consumers to be made better off because they are able to buy a product or service that was otherwise unaffordable.

C) Price discrimination leads to higher prices for all consumers and a reduction in consumer surplus.

D) Price discrimination reduces total quantity exchanged and therefore reduces the sum of producer and consumer surplus.

E) Price discrimination violates the Canadian Charter of Rights and Freedoms.