Econ 315 Practice Quiz 4 - CH 10 and 11
A 10 percent decrease in advertising results in a 5 percent sales decrease. The advertising elasticity of demand is ________.
0.5
Scenario 10.9: Maui Macadamia Inc. has a monopoly in the macadamia nut industry. The demand curve, marginal revenue and marginal cost curve for macadamia nuts are given as follows: P = 360 - 4Q MR = 360 - 8Q MC = 4Q Refer to Scenario 10.9. What is the profit maximizing level of output?
30
Scenario 10.3: The demand curve and marginal revenue curve for red herrings are given as follows: Q = 250 - 5P MR = 50 - 0.4Q Refer to Scenario 10.3. The marginal cost of red herrings is given as: MC = 0.6Q. What is the profit-maximizing level of output?
50
Johnny's Shop-and-Pay is a regional grocery chain, and their marketing manager is trying to determine the profit-maximizing coupon program for the store's laundry detergent brand. Coupon users at the store have an elasticity of demand for this product that equals -3, and the elasticity of demand for non-users of the coupon for the store brand equals -1.5. If the full retail (undiscounted) price of the detergent is $10 per box, what is the optimal discount to provide for coupon users?
50% off
Scenario 10.1: Barbara is a producer in a monopoly industry. Her demand curve, total revenue curve, marginal revenue curve and total cost curve are given as follows: Q = 160 - 4P TR = 40Q - 0.25Q2 MR = 40 - 0.5Q TC = 4Q MC = 4 Refer to Scenario 10.1. How much output will Barbara produce?
72
Which of the following is true for a competitive buyer? AE = ME AE < ME AE > ME AE greater or equal to ME
AE = ME
Bundling products makes sense for the seller when A. firms cannot price discriminate B. the products are complementary in nature. C. consumers have heterogeneous demands. D. both A and C.
D. both A and C
Zinc Communications developed a new type of cellular telephone that has a three-dimensional (3-D) screen. The company holds a patent on this technology, so they are the only seller of the 3-D phone when it is introduced. Over time, other companies introduce phones that are similar but not identical (i.e., they do not violate the patent held by Zinc). What happens to the demand for 3-D phones facing Zinc and to the profit-maximizing price for the 3-D phone as these similar products enter the market?
Demand becomes more elastic, price declines.
What is the key characteristic of profit maximizing price discrimination that distinguishes intertemporal price discrimination from peak-load pricing?
Marginal costs are independent across time periods under peak-load pricing.
What is the profit maximizing condition for a vertically integrated firm?
Net marginal revenue equals the marginal cost of each intermediate good.
Figure 10.3 The marginal value curve and expenditure curves in the diagram above are those of a monopsony. Refer to Figure 10.3. What is the competitive price? The graph y-axis labeled Price [$ per unit output], in ascending order P5, P4, P3, P2, P1. x-axis labeled Output, from left to right labeled with Q1, Q2, Q3, and Q4 P5 intersects with Q1 on ME. P5 intersects with Q3 on S=AE. P4 intersects with Q2 on ME and Q4 on the intersection of S=AE and MV. P3 intersects with Q3 on the intersection of ME and MV P2 and P1 hit the MV curve just past Q2 and Q1 respectively.
P4
Figure 10.3 The marginal value curve and expenditure curves in the diagram above are those of a monopsony. Refer to Figure 10.3. What quantity will the monopsonist purchase to maximize profit? Same graph as described above
Q3
You produce stereo components for sale in two markets, foreign and domestic, and the two groups of consumers cannot trade with one another. If your firm practices third-degree price discrimination to maximize profits, the marginal revenue in the domestic market will equal the marginal revenue in the domestic market. in the domestic market will equal the marginal cost. in the foreign market will equal the marginal cost. all of the above none of the above
all of the above
A local restaurant sells strawberry pie for $3.00 per slice. However, if you order the prime rib dinner, you can get a slice of pie for only a dollar. This is an example of
bundling.
If a monopolist's profits were taxed away and redistributed to its consumers,
inefficiency would remain because output would be lower than under competitive conditions.
In the personal computer market, some large manufacturers are able to buy computer components (e.g., disk drives, flat-screen monitors, and memory chips) and software at lower prices than smaller firms in the market. This outcome indicates that the large firms enjoy some degree of ________ in this market.
monopsony power
When the movie Jurassic Park debuted in Westwood, California, the price of tickets was $7.50. After several months the ticket price had fallen to $4.00. This is an example of peak-load pricing. second-degree price discrimination tying a two-part tariff none of the above
none of the above
In 1994, the Walt Disney Corporation ran a special promotion on tickets to Disneyland. Residents of southern California who lived near the amusement park were offered admission at the special price of $22. Other visitors to Disneyland were charged about $30. This practice is an example of:
price discrimination.
Which of the following is not an important antitrust law? the Consumer Protection Act of 1932 the Clayton Act of 1914 the Sherman Act of 1890 the Federal Trade Commission Act of 1914 None of the above are antitrust laws.
the Consumer Protection Act of 1932
A doctor charges two different prices for medical services, and the price level depends on the patients' income such that wealthy patients are charged more than poorer ones. This pricing scheme represents a form of
third-degree price discrimination.