A) It allows firms to tie goods that are highly valued together with goods that are not highly valued, hence increasing profits for firms.
B) It is a way to force consumers to buy more than what they would without tying.
C) It is a subtle way to raise prices for those consumers who have a low willingness to pay.
D) It is a subtle way to charge higher prices to those consumers with a high willingness to pay, and a lower price to consumers with a low willingness to pay.
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A) above the marginal revenue curve.
B) below the marginal revenue curve.
C) with the marginal revenue curve.
D) tangent to the marginal revenue curve at the equilibrium point.
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A) gasoline, movie tickets, consumer bleach
B) dental root canals, haircuts, and cosmetic surgery
C) third-party car stereos, full-service restaurant meals, and novels
D) computer software, computer hardware, and tickets to sporting events
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A) putting arsenic in its plastics to prevent it from being resold to dentists.
B) dyeing all of its women's underwear pink so that fewer men would buy it.
C) charging the Pentagon 500 times the going market price for Styrofoam cups.
D) declaring bankruptcy to sell its granite countertops below the government mandated minimum price.
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A) be charged less for a product
B) be charged more for a product
C) sometimes be charged more and sometimes charged less
D) be charged a price equal to the marginal cost
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A) efficient level of output.
B) market price.
C) total cost of production.
D) every customer's willingness to pay.
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A) If price discrimination expands the size of the market, the fixed costs can be spread over a much larger output level.
B) If price discrimination lowers profits, firms will produce less and have lower fixed costs.
C) Consumers with inelastic demand are less costly to serve, lowering the fixed costs of production.
D) Consumers with elastic demand are less costly to serve, lowering the fixed costs of production.
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A) Higher production costs accounts for the entire price difference.
B) Unlike paperback books, hardcover books are generally exempt from state sales taxes.
C) Consumers who can't wait for the paperback version have a greater willingness to pay and buy the hardback upon its release.
D) Hardcover books are of higher quality, and the difference in price reflects this.
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A) Early adopters are less sensitive to price than late adopters.
B) Early adopters have a higher demand than late adopters.
C) Early adopters have a more elastic demand curve than late adopters.
D) It's not an example of price discrimination.
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A) higher prices are required when costs are higher.
B) lower prices are possible when profits are not a goal of the entrepreneur.
C) higher prices are charged because some customers are willing to pay more.
D) lower prices encourage arbitrage.
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A) no firm can enter the market for HP ink.
B) no firm can enter the market for HP printers.
C) HP must sell its printers at relatively high price.
D) HP must always sell its printers and ink cartridges in a package.
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A) If the demand curves are different, it is more profitable to set different prices in different markets than a single price that covers all markets.
B) To maximize profit the firm should set a higher price in markets with more inelastic demand.
C) Arbitrage makes it difficult for a firm to set different prices in different markets thereby reducing the profit from price discrimination.
D) All of the answers are correct.
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A) quit selling the product in the market with the inelastic demand.
B) begin to charge the same price in both markets.
C) increase the price in the inelastic market and lower the price in the elastic market.
D) raise the price in both markets.
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A) to prevent people from buying videos in a low-price region and then reselling them in a high-price region
B) to make it easier to charge the same price in different locations
C) to minimize the menu costs of frequent price changes
D) to reduce the cost of collecting sales taxes, especially in areas with different tax rates
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Airlines set different prices according ...View Answer
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A) $5 < PU < $9
B) $5 < PU < $10
C) $9 < PU < $10
D) $7 < PU < $10
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A) both Market A and Market B worse off.
B) Market A no worse off but consumers in Market B worse off.
C) Market B no worse off but consumers in Market A worse off.
D) both markets better off, as single pricing is always better for consumers than price discrimination.
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