Question : 31) Consider three pricing strategies that the firm can pursue: : 1387958

 

 

31) Consider three pricing strategies that the firm can pursue:

a.optimal two-part tariff pricing;

b.perfect price discrimination

c.single-price monopoly pricing

 

Of these three strategies, which is most beneficial to society as a whole?

A) Both perfect price discrimination and a two-part tariff pricing are equally beneficial in that the marginal benefit of the last unit sold equals the marginal cost of producing that unit.

B) only perfect price discrimination because this pricing method eliminates deadweight loss

C) single-price monopoly pricing because consumers enjoy at least some consumer surplus

D) only two-part tariff pricing because the per-unit portion of the price is set equal to marginal cost

 

32) Which of the following statements is true about optimal two-part tariff and perfect price discrimination for a given demand curve?

A) The total revenue received under the two pricing schedules is the same.

B) The total revenue received under an optimal two-part tariff exceeds that received under perfect price discrimination.

C) The total revenue received under an optimal two-part tariff is less than that received under perfect price discrimination.

D) The total revenue received under an optimal two-part tariff could be greater than, less than or equal to that received under perfect price discrimination, depending on the fixed-fee portion of the two-part tariff.

 

 

33) Consider three pricing strategies that the firm can pursue:

a.optimal two-part tariff pricing

b.perfect price discrimination

c.single-price monopoly pricing

 

Of these three strategies, which method gives the firm the highest profit?

A) optimal two-part tariff pricing

B) perfect price discrimination

C) single-price monopoly pricing

D) The profit is the same under optimal two-part tariff pricing and perfect price discrimination and the profit is higher than under single-price monopoly pricing.

 

 

34) If, at the firm’s projected sales level, the marginal cost is $40, the average cost is $50 and the markup is 30 percent, then its selling price is

A) $40.

B) $50.

C) $52.

D) $65.

 

35) If the selling price of a firm’s product is $200 and the estimated average cost of producing this product is $150, what is the firm’s markup?

A) 75 percent

B) 33.33 percent

C) 25 percent

D) impossible to determine with the information given

 

 

36) When a firm charges $4.95 instead of $5.00, what do economists call this pricing strategy?

A) cost-plus pricing

B) indirect pricing

C) odd pricing

D) unusual pricing

 

 

37) Odd pricing became common in the late 19th century. Although the origins of odd pricing are uncertain, several explanations for the practice have been given. Which of the following is one of these explanations?

A) Odd pricing forced employees to give customers change. This made it more likely that employees would record sales rather than pocketing their customers’ money.

B) Odd pricing began in an era when it was difficult for owners and managers of firms to determine the marginal cost of the goods and services they sold. Odd prices were rough estimates designed to cover costs plus earn firms a profit.

C) Odd pricing was begun in England in the 1700s when America was part of the British Empire. Members of the British Royal Court were given the task of pricing products. After independence, merchants in the United States carried on the practice of odd pricing.

D) After the passage of the Sherman Act in 1890, merchants used odd pricing as a means of avoiding prosecution for antitrust violations.

 

38) Many firms use odd pricing—charging prices such as $.99 instead of $1.00 and $9.99 instead of $10.00. One reason for this pricing strategy is that consumers will somehow believe that the difference in price appears to be greater than it actually is. Researchers conducted consumer surveys to determine whether this is actually the case. What was the result of these surveys?

A) The surveys found that small differences in price cause small differences in quantity demanded. There is no evidence that odd pricing makes economic sense.

B) Although the results were not conclusive, there is some evidence that odd pricing makes economic sense.

C) The surveys found indifference regarding this strategy among most consumers, but hostility among other consumers. The latter group resented what they viewed as an attempt to fool them into buying products with odd prices. Researchers concluded that odd pricing is counterproductive.

D) The survey results were inconclusive because most consumers gave unreliable responses to the survey questions.

 

 

39) When firms price their products by adding a percentage markup to their average costs of production, this is called

A) average cost pricing.

B) rounding up.

C) break-even pricing.

D) cost-plus pricing.

 

 

40) If, at a firm’s projected sales level, the marginal cost is $125, the average cost is $150 and the markup is 20 percent, then its selling price is

A) $125.

B) $150.

C) $165.

D) $180.