71) In which market structure is it not possible to practice price discrimination?
A) perfect competition
B) monopolistic competition
C) oligopoly
D) monopoly
72) Which of the following is not an example of price discrimination?
A) Adobe Systems offers software at discounted prices to students and faculty at K-12 and university levels.
B) Unlike foreign tourists, citizens of Cambodia are exempted from paying an admission fee to the temples of Angkor.
C) Senior citizens may purchase special fare tickets for public transportation that are not available to others.
D) Buyers at an automotive parts store receive a discount for bulk buying because the store is able to pass on to its customers some of the lower average cost for producing large quantities.
73) Erin and Deidre, two residents in Ithaca, New York, are planning a trip to Boston. Erin, the sales manager for a large retailer, has to attend a business meeting. Deidre, a college student on vacation, is planning a leisurely trip to visit friends and relatives. Whose demand curve for air travel is likely to be more elastic?
A) Erin
B) Deidre
C) There is no difference in their price elasticities of demand.
D) The elasticity of the demand curves for Erin and Deidre cannot be determined without more information.
74) Erin and Deidre, two residents of Ithaca, New York, are planning a trip to Boston. Erin, the sales manager for a large retailer, has to attend a business meeting. Deidre, a college student on vacation, is planning a leisurely trip to visit friends and relatives. Which of the following statements is true?
A) An airline that price discriminates will charge Erin a higher price.
B) An airline that price discriminates will charge Deidre a higher price.
C) Since there is no difference in the cost of producing air travel, airlines will not charge different prices to Erin and Deidre.
D) An airline cannot price discriminate because buyers can resell their tickets through the Internet.
75) Suppose Dublin Electronics charges regular customers $90 for a Blu-ray player but allows senior citizens to purchase the same item for $75. Is this likely to be a successful price discriminating strategy?
A) Yes, firms price discriminate to maximize profits.
B) No, price discrimination will not be effective because the store cannot prevent senior citizens from buying large quantities of Blu-ray players and reselling them for a profit.
C) Yes, because senior citizens are likely to have a more elastic demand and therefore will be willing to pay a lower price compared to regular customers.
D) No, because there are many different brands of Blu-ray players and consumers will shop around.
76) Which of the following products allows the seller to identify different groups of consumers (segment the market) and practice price discrimination?
A) clothing items sold through Macy’s Department Store
B) a hamburger sold at Burger King
C) a cafe latte sold at Starbucks
D) tickets to matinee shows at a movie theatre
77) Why might a producer practice price discrimination?
A) to make its products more affordable to those with low incomes
B) to maximize economic efficiency
C) to maximize profits
D) to maximize quantity demanded
78) Which of the following pricing strategies allows a firm to earn economic profit?
A) price discrimination
B) charging a price equal to marginal cost
C) charging a price equal to the average total cost of production
D) charging a price equal to the average variable cost of production
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