Question :
Watanabe Sensei operates the only martial arts school in Hartfield. : 1387961
Watanabe Sensei operates the only martial arts school in Hartfield. For simplicity, assume that consumers have identical demand curves and that Sensei knows what this demand curve is. Figure 16-6 shows this demand curve.
61) Refer to Figure 16-6. Suppose instead of charging the monopoly price for his classes, Sensei charges the competitive price. What is the competitive price and what is the quantity demanded at this price?
A) P0, Q1
B) P0, Q0
C) P1, Q0
D) P1, Q1
62) Refer to Figure 16-6. If Sensei charges the competitive price for his classes, what is the maximum amount of admission fee that he can collect from his customers?
A) the area A + B
B) the area A + B + C + D
C) the area A + B + C + D + E
D) the area A + C + D + G + H
63) Refer to Figure 16-6. With this pricing scheme—a competitive price for the classes and a one-time membership fee—what amount of producer surplus will Sensei earn?
A) the area A + B + C + D + E.
B) the area E + F.
C) the area H + G + F.
D) the area A + B + C + D + E + F + G + H
Figure 16-7
The Lizard Lounge is well known for its exotic cocktails. Figure 16-7 shows its estimated demand curve for cocktails.
64) Refer to Figure 16-7. The owners of the Lizard Lounge are considering the following four pricing options:
a.A single price scheme where the price of cocktails equals the monopoly price.
b.A single price scheme where the cocktail price equals the competitive price.
c.A two-part tariff: a monopoly price for cocktails and a cover charge that will generate total revenue equal to the area X.
d.A two-part tariff: a competitive price for cocktails and a cover charge that will generate total revenue equal to the area X + Y + Z.
Which scheme will earn the largest profit?
A) scheme a
B) scheme b
C) scheme c
D) scheme d
65) Refer to Figure 16-7. The owners of the Lizard Lounge are considering the following four pricing options:
a.A single price scheme where the cocktail price equals the monopoly price.
b.A single price scheme where the cocktail price equals the competitive price.
c.A two-part tariff: a monopoly price for cocktails and a cover charge that will generate total revenue equal to the area X.
d.A two-part tariff: a competitive price for cocktails and a cover charge that will generate total revenue equal to the area X + Y + Z.
Under which scheme are the Lounge customers better off?
A) scheme a
B) scheme b
C) scheme c
D) scheme d
66) Refer to Figure 16-7. The owners of the Lizard Lounge are considering the following four pricing options:
a.A single price scheme where the cocktail price equals the monopoly price.
b.A single price scheme where the cocktail price equals the competitive price.
c.A two-part tariff: a monopoly cocktail price and a cover charge that will generate total revenue equal to the area X.
d.A two-part tariff: a competitive cocktail price and whatever cover charge that will generate a total revenue equivalent to the area X + Y + Z.
Which pricing scheme(s) achieve the economically efficient outcome?
A) schemes a and c
B) scheme b
C) schemes b and d
D) scheme d only
67) Movie theaters often charge different people different prices for admission. Why don’t theaters charge different prices for popcorn and other food items?
A) Although the elasticity of demand for admission differs among customers, most people have the same the elasticity of demand for food items.
B) Concession stand personnel are too busy to ensure that different people pay different prices for food items.
C) Once people are in the theater, concession stands have monopoly power and can charge everyone the same high prices for food.
D) It is difficult to limit the resale of food items from those who pay low prices to those who would have to pay high prices from the concession stand.
68) A two-part tariff refers to a pricing schedule under which a buyer must pay a fixed fee for the right to purchase the product, in addition to a per-unit price.
69) An optimal two-part tariff pricing schedule maximizes consumer surplus.
70) If marginal costs differ quite substantially from average total costs, then using a cost-plus pricing schedule will not lead to the profit maximizing price.
