Chapter 10: Price Discrimination
Arbitrage is ________ in one market and ________ in another market. A) buying low; selling higher B) selling low; buying higher C) selling high; buying higher D) buying high; selling lower
A
In the absence of price discrimination,: A) total output will be less. B) prices will always fall. C) total consumption of the good will be higher. D) poorer consumers are better off.
A
Merit scholarships not only allow universities to attract the most talented students, but to also practice price discrimination since meritorious students: A) have many substitutes for attendance at any particular college. B) have highly inelastic demand for going to college. C) do not have to submit their parents' tax returns to the financial aid office. D) can easily arbitrage their education.
A
Price discrimination can be defined as: A) selling the same product at two different prices in two different markets. B) exporting goods to foreign countries. C) selling the same product in two different markets. D) selling different products to the same consumers in the same market.
A
Taking advantage of price differences for the same good by buying low in one market and selling high in another market is called: A) arbitrage. B) fuselage. C) seigniorage. D) sabotage.
A
To perfectly price discriminate, a firm must have full information of: A) every customer's willingness to pay. B) efficient level of output. C) total cost of production. D) market price.
A
Why is it important for firms practicing price discrimination to prevent arbitrage of their product? A) Arbitrage reduces the profits from price discrimination for firms, and it increases profits for smugglers. B) Smugglers alter product quality as they pass from market to market, hence harming the reputation and future profits of firms C) Arbitrage increases deadweight loss in the market. D) Arbitrage is unrelated to firms' profits since the products are still being sold
A
A perfect price-discriminating seller: A) charges a single price. B) eliminates deadweight loss. C) maximizes consumer surplus. D) cannot prevent arbitrage.
B
How did IBM price discriminate its laser printers? A) IBM provided special financing terms to different customers. B) IBM offered two different printers: a fast printer and a slow printer. C) IBM offered printers in different colors. D) IBM charged seniors lower prices than businesses.
B
To maximize profit the monopolist should set a: A) lower price in markets with less elastic demand. B) higher price in markets with more inelastic demand. C) higher price in markets with more elastic demand. D) lower price in markets with more inelastic demand.
B
