Question :
21) For a firm that can effectively price discriminate, who : 1387939
21) For a firm that can effectively price discriminate, who will be charged a lower price?
A) customers who have an elastic demand for the product
B) customers who have an inelastic demand for the product
C) buyers that are members of the largest market segment
D) buyers that are members of the smallest market segment
22) Calling long distance is often more expensive on weekdays between 8 am and 5 pm than in the evening hours. Why is this the case?
A) Telephone companies hope to discourage customers from calling long distance during the day to keep their labor costs down.
B) The cost of making long-distance connections is higher during the day than in the evenings.
C) Businesses who must call suppliers or customers during business hours have few alternatives and therefore have an inelastic demand during the workday compared to after-work hours.
D) Increasingly, businesses who must call suppliers or customers during business hours resort to the internet, thereby reducing demand for long-distance calls. To make up for this fall in demand, telephone companies charge higher rates.
23) The Bay Area subway system, BART, offers senior citizens discounted fares for BART rides. This suggests that BART authorities believe that senior citizens have a ________ demand for subway rides.
A) more income elastic
B) less income elastic
C) more price elastic
D) less price elastic
24) An article on how prices in South Bend, Indiana rise during Notre Dame home football games noted: “For the Sept. 16 game against the University of Michigan, the South Bend Marriott is charging $649 a night for a double room. …… The Marriott’s regular weekend price is $149 a night.”
Source: Ilan Brat, “Notre Dame Football Introduces Its Fans To Inflationary Spiral,” Wall Street Journal, September 7, 2006, p. A1.
Which of the following statements is true?
A) The Marriott is practicing first-degree price discrimination by charging what the market will bear.
B) This is evidence of third-degree price discrimination because hotel accommodation on a particular day is not a product that can be resold later.
C) There is no evidence of price discrimination; the Marriott is responding to increased demand for hotel rooms in the face of constant supply.
D) The Marriott has adopted this pricing strategy to capitalize on arbitrage profits.
25) From an economic perspective, price discrimination is desirable because
A) the increase in profits is more than offset by the loss in consumer surplus, resulting in a net increase in economic surplus.
B) it enables firms to increase profits with no loss in economic surplus, and in turn, this could provide firms with incentives to engage in beneficial product innovation.
C) the increase in profits results in higher corporate tax revenues received by the government which could be used to subsidize consumption for low-income individuals.
D) it redistributes wealth from wealthy consumers to highly innovative firms.
26) Yield management and price discrimination have enabled firms to increase profits and, at the same time,
A) reduce the cost of production.
B) capture some consumer surplus.
C) reduce transactions costs.
D) transfer some producer surplus to consumers.
27) Which of the following is a reason why airline yield management is an effective method to increase revenue?
A) because airlines have invested heavily in developing computer models that identify optimal pricing strategies in the various market segments
B) because airlines have successfully induced customers to reveal their resources and preferences by offering them different versions of the product such as business class and coach plane tickets
C) because a ticket is a contract to transport a specific person, and is not transferable
D) because airlines have a monopoly in long-distance carriage
28) When colleges use yield management techniques, they
A) rank students on the basis of academic merit and award higher financial aid offers to those at the top of the ranking.
B) increase financial aid offers to students whose demand for college education is likely to be more price elastic and reduce financial aid offers to students whose demand for college education is likely to be less price elastic.
C) rank students on the basis of academic merit and award higher financial aid offers to those at the bottom of the ranking.
D) increase financial aid offers to students whose demand for college education is likely to be more price inelastic and reduce financial aid offers to students whose demand for college education is likely to be less price inelastic.
29) If a firm could practice perfect price discrimination, it would
A) allow resale of its product.
B) charge every buyer a different price.
C) charge a price based on the quantity of a product bought.
D) use odd pricing.
30) With perfect price discrimination there is
A) no deadweight loss.
B) no producer surplus.
C) one single price.
D) an increase in consumer surplus.
