Question : Figure 16-5 21) Refer to Figure 16-5.  Suppose the firm represented : 1387957

 

Figure 16-5

 

 

21) Refer to Figure 16-5.  Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price. (This is also called an optimal two-part tariff.) What is the per-unit price it should charge, if any?

A) It should not charge a price per unit; just a flat fee to consume as much of the product as desired.

B) It should charge a range of prices from $40 to $12.

C) $12

D) $16

 

 

22) Refer to Figure 16-5.  Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price. (This is also called an optimal two-part tariff.) What is the total revenue it can expect to collect from the fixed fee portion of the price?

A) $2,560

B) $5,760

C) $7,870

D) $10,240

 

 

23) Refer to Figure 16-5.  Suppose the firm represented in the diagram decides to use a two-part pricing strategy such that it charges a fixed fee and a per-unit price equal to the competitive price. (This is also called an optimal two-part tariff.) What is the value of the consumer surplus from this pricing strategy?

A) $2,560

B) $5,760

C) $7,870

D) 0

 

24) Refer to Figure 16-5.  Consider the following two pricing strategies:

a. a fixed fee and a per-unit price equal to the monopoly price

b. a fixed fee and a per-unit price equal to the competitive price

 

The firm represented in the diagram earns a higher profit under strategy ________ and deadweight loss is eliminated under ________.

A) b; b

B) a; b

C) a; neither strategy

D) b; neither strategy

 

 

25) Refer to Figure 16-5.  Suppose the firm represented in the diagram decides to practice perfect price discrimination. What is the profit-maximizing quantity?

A) 320 units

B) 480 units

C) 560 units

D) 640 units

 

 

26) Refer to Figure 16-5.  Suppose the firm represented in the diagram decides to practice perfect price discrimination. What is the profit-maximizing price it will charge?

A) It should charge a range of prices from $40 to $16.

B) It should charge a range of prices from $40 to $12.

C) $2

D) $8

 

27) Refer to Figure 16-5.  Suppose the firm represented in the diagram decides to practice perfect price discrimination. What is the total revenue collected by the firm?

A) $6,720

B) $7,680

C) $10,240

D) $13,440

 

 

28) Refer to Figure 16-5.  Suppose the firm represented in the diagram decides to act as a monopolist and charge a single price. What is the profit maximizing quantity produced and what is the price charged?

A) Q = 240 units; P = $28

B) Q = 320 units; P = $24

C) Q = 480 units; P = $16

D) Q = 560 units; P = $12

 

 

29) Which of the following statements is true?

A) Consumer surplus under perfect price discrimination is greater than under single-price monopoly pricing.

B) Consumer surplus under an optimal two-part tariff is greater than that under single-price monopoly pricing.

C) Although consumers reap some consumer surplus under a single-price monopoly, society is better off with optimal two-part tariff pricing.

D) Of the three pricing schedules, single-price monopoly, an optimal two-part tariff and perfect price discrimination, profit is highest under single-price monopoly pricing.

 

30) 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 least likely to benefit society as a whole?

A) a two-part tariff pricing because consumers have to pay a fixed fee in addition to a per-unit price

B) perfect price discrimination because those willing to pay higher prices are forced to subsidize those who are not

C) Both perfect price discrimination and two-part tariff pricing do not benefit society because the entire consumer surplus is extracted by the producer.

D) single-price monopoly pricing because there are mutually beneficial trades (between consumers and seller) that are not exploited