Chapter 11 Quiz

Seven potential customers are interested in seeing a movie. Since the marginal cost of admitting additional customers is zero, the movie theater maximizes its profits by maximizing its revenue .Click to view larger image. Using the table shown, if the theater can only charge one price to all customers, what price does it charge?

D. $6 - lowest price on the list

Suppose a monopolist practices perfect price discrimination. It will have Select one: a.a greater total revenue and sell a greater output than if it were not practicing price discrimination. b.a smaller total revenue and sell a smaller output than if it were not practicing price discrimination. c.the same total revenue but sell a larger output than if it were not practicing price discrimination. d.the same total revenue, but a smaller output than if it were not practicing price discrimination.

a. a greater total revenue and sell a greater output than if it were not practicing price discrimination.

Which of the following is an example of price discrimination? Select one: a. airlines charging lower prices for those who book in advance b. Little Roman's pizza menu with the following prices: cheese pizza = $8, supreme = $11 c. $6 foot-long subs at Subway d. the McPick 2 menu at McDonald's

a. airlines charging lower prices for those who book in advance

Seven potential customers are interested in seeing a movie. Since the marginal cost of admitting additional customers is zero, the movie theater maximizes its profits by maximizing its revenue.Click to view larger image.Using the table shown, if the theater charges two prices (based on age), it should choose a higher price of ____________ and a lower price of ____________. Select one: a. $11; $6 b. $10; $6 c. $9; $7 d. $8; $6

b. $10; $6 lowest price not counting Allison (66yrsold)

Which of the following statements is true? Select one: a. You should never tip a host in a restaurant in order to avoid a long wait. b. Even though the pharmaceutical industry cannot stop other countries from selling lower price drugs to U.S. residents, the industry's efforts to price-discriminate are profitable. c. Prestigious theaters that can sell tickets for operas for $500 should never sell tickets at $20 prices. d. Perfect price discrimination can never lead to the most socially desirable level of output since it involves monopoly power.

b. Even though the pharmaceutical industry cannot stop other countries from selling lower price drugs to U.S. residents, the industry's efforts to price-discriminate are profitable.

At many amusement parks, customers who enter the park after 4 p.m. receive a steep discount on the price they pay. This is a type of price discrimination because the amusement park charges a higher price to Select one: a. families with young children who aren't in school. b. people who have a more inelastic demand for amusement parks. c. people who have a more elastic demand for amusement parks. d. people who are rich enough to visit the amusement park for an entire day.

b. people who have a more inelastic demand for amusement parks.

A firm carries out price discrimination when it charges Select one: a. a higher price to consumers whose demand is more elastic. b. a higher price when their marginal cost is lower. c. a lower price to consumers whose demand is more elastic. d. the same price to all of their consumers.

c. a lower price to consumers whose demand is more elastic

At many amusement parks, customers who enter the park after 4 p.m. receive a steep discount on the price they pay. This is a type of price discrimination because the amusement park charges a lower price to Select one: a. students who can't visit until after 4 p.m. anyway. b. people who have a more inelastic demand for amusement parks. c. people who have a more elastic demand for amusement parks. d. people with 9-to-5 jobs.

c. people who have a more elastic demand for amusement parks.

Which of the following is an example of perfect price discrimination? Select one: a. A cell phone carrier offers unlimited calling on the weekends for all of its customers. b. Tickets to the student section for all basketball games are $5. c. A restaurant offers a 20% discount for customers who order dinner between 4 and 6 p.m. d. A golf instructor charges each customer a fee just under the customer's maximum willingness to pay for lessons.

d. A golf instructor charges each customer a fee just under the customer's maximum willingness to pay for lessons

Which of the following statements is true? Select one: a. There is a deadweight loss associated with perfect price discrimination. b. There is no producer surplus associated with perfect price discrimination. c. For a monopoly there is an increase in total welfare for society compared to perfect competition. d. In perfect price discrimination, the firm is able to convert the entire area of consumer surplus that existed under perfect competition into producer surplus.

d. In perfect price discrimination, the firm is able to convert the entire area of consumer surplus that existed under perfect competition into producer surplus.

Why does price discrimination improve the efficiency of the market compared to monopoly or monopolistic competition? Select one: a. It allows firms to produce goods at the minimum efficient scale. b. It forces firms who do not price-discriminate to leave the business. c. Price discrimination only occurs in a perfectly competitive environment. d. Perfect price discrimination allows us to be at a point where MC = D.

d. Perfect price discrimination allows us to be at a point where MC = D.