Question 1
Which of the following is true for Price discrimination
Select one:
a. Regards normative assessment of the pricing practice
b. Means the price to marginal cost ratio differs between or among similar products
C. Is primarily concerned with ascertaining the social welfare effects of charging different prices to different customers
d. None of the above are true in regard to price discrimination
Question 2
The following are possible examples of price discrimination, except:
Select one:
a. subscription prices for a professional journal are higher when bought by a library than when bought by an individual
b. prices in export markets are lower than for identical products in the domestic market
c. senior citizens pay lower fares on public transportation than younger people at the same time
d. a product sells at a higher price at location A than at location B, because transportation costs are higher from the factory to A
Question 3
Assume that a multinational company produces components in country A, and ships them toa subsidiary in country B. Ir order to increase its profits
Select one:
a. the company should charge a low transfer price for the components if income taxes in country B are higher than i, country A
b. the company should charge a high transfer price for the components it income taxes in country A are higher than in country B
c. the company should charge a high transfer price for the components if income taxes in country B are higher than in country A
d. None of the above
Question 4 All of the following are conditions which are favorable to the formation of cartels, except:
Select one:
a. homogeneity of the product
b. easy entry into the industry
c. geographic proximity of firms
d. the existence of a small number of firms
Question 5
In order that price discrimination can exist,
Select one:
a. markets must be capable of being separated
b. markets must be interdependent
c. different demand price elasticities must exist in different markets
d. demand price elasticities must be identical in all markets
e. Both A and C
Question 6
Dominant price leadership exists when:
Select one:
a. the dominant firm decides how much each of its competitors can sell
b. the dominant firm charges the lowest price in the industry
c. one firm drives the others out of the market
d. the dominant firm establishes the price at the quantity where its MR = MC, and permits all other firms to sell all they want to sell at that price
Question 7
When a firm engages in cost-plus pricing:
Select one:
a. It is ignoring principles of profit maximization as fixed cost is included in the determination of the selling price
b. The resulting level of output the firm produces may be consistent with a marginal pricing approach if the long-ru average cost curve exhibits constant returns to scale over the relevant range of output
c. The firm may appear to be engaging in a marginal pricing practice even if the markup is not a reflection of a normal profit
d. All of the above are correct
Question 8
Why might a company use an indirect price discrimination scheme versus direct price discrimination?
Select one:
a. The company can prevent arbitrage between its different customer types
b. The demand for each customer type is the same
c. The different customer types cannot be uniquely identified directly
d. The different customer types shop at different stories A cartel price will be established at the quantity where:
Question 9
A cartel price will be established at the quantity
Select one:
a. marginal cost equals industry price
b. the sum of the members' marginal costs equals industry marginal revenue
c. average cost equals the industry revenuequestion
d. total cost equals the industry total revenue
Question 10
Revenue maximization occurs when a firm sells at a price:
Select one:
a. that is equal to its minimum average variable cost
b. where its marginal revenue is equal to its marginal cost
c. where its marginal revenue is zero
d. None of the above