Which of the following packages designed for the obsessed customers are incentive compatible?

needed for price Show more Please answer the questions using A B C or D 1. Which of the following is not needed for price discrimination to be possible? The firm must be able to prevent resale and arbitrage. The firm must eventually learn about its customers demands. The firms customers must have different demand curves. The firm must have market power. 2. Relative to standard monopoly pricing first-degree price discrimination results in: lower consumer surplus higher producer surplus and lower total surplus. lower consumer surplus lower producer surplus and lower total surplus. lower consumer surplus higher producer surplus and higher total surplus. higher consumer surplus higher producer surplus and higher total surplus. 3. If market demand is P = 100 Q and the firm has a constant marginal cost of 20 then with first-degree price discrimination the firms producer surplus will be: $1600. $2400. $3200. $800. 4. In order for third-degree discrimination to be possible which of the following features is not required? identification of each customers demand before purchase customers with different demand curves prevention of resale market power 5. A golf course has frequent players whose demand is Qf = 260 0.4P and infrequent players whose demand is Qi = 10 0.1P. Combined market demand is Q = 34 0.4P. The marginal cost and average total cost of providing a round of golf are $20. How much higher will profit be if the golf course uses third-degree price discrimination instead of charging all golfers the same price? $7.50 $0 $10 $110 6. An airline sells seats on its flights to business travelers whose demand is QB = 300 P and to vacation travelers whose demand is QV = 150 0.5P. Combined market demand is Q = 450 1.5P. The marginal cost and average total cost of providing a seat on a flight are $200. How much higher will profit be if the airline uses third-degree price discrimination instead of charging all travelers the same price? $400 $250 $1000 $0 7. If a firm practices third-degree price discrimination the price charged should be higher in the market where demand is: less price elastic. more price elastic. higher. lower. 8. The key difference between markets where third-degree price discrimination is possible and markets where second-degree price discrimination is possible is whether: firms can identify customers demand before the customers make a purchase. customers have the same demand curves. firms have market power. resale is possible. 9. In order for price discrimination via a quantity discount to work: customers who purchase larger quantities must have relatively inelastic demand. customers who pay a relatively low price must have relatively inelastic demand. customers who purchase larger quantities must have relatively elastic demand. customers who pay a relatively high price must have relatively elastic demand. 10. A firm wants to offer a quantity discount in order to price-discriminate between buyers who are relatively uninterested in the product and buyers who are obsessively interested in it. The uninterested customers have demand of QU = 30 0.5P. The package offered to them contains 10 units of the good at a price of $40 each. Which of the following packages designed for the obsessed customers are incentive compatible? 60 units at a price of $20 each 60 units at a price of $10 each 40 units at a price of $10 each 40 units at a price of $20 each 11. Which of the following conditions do not have to be met in order for indirect price discrimination by versioning to work? The marginal costs of producing each version of the product must be the same. The firm must have market power. The firm must be able to prevent resale. The firms customers must have different demand curves. 12. Willingness to pay (per month) Willingness to pay (per month) Weight machines Indoor pool Abe $60 $50 Betty 50 125 Chris 25 140 13. This table shows the willingness to pay of the only three potential customers of a firm that runs both a weight room and an indoor swimming pool. The weight room and pool each have a constant marginal cost of $20 per month. Which of the following pricing strategies yields the highest producer surplus? $50 for the weight room $125 for the pool or $165 for both $60 for the weight room $130 for the pool or $175 for both $25 for the weight room $50 for the pool or $70 for both $60 for the weight room $140 for the pool or $175 for both 13. Which of the following features is needed to make bundling a possible price discrimination strategy but is not required for any other price discrimination strategies? Demand for two products must be negatively correlated. The firm does not learn about customer demand until after purchase. The firm must not have market power. Customers must have identical demand curves. 14. Which of the following features is not needed for price discrimination using a two-part tariff to work? The firm must be able to prevent resale. The firms customers must have different demand curves. The firm must learn about its customers demands before purchases are made. The firm must have market power. 15. A firm faces a market demand curve P = 50 5Q. It has a constant marginal cost of $10. Relative to standard monopoly pricing how would a block pricing strategy where the first four units can be purchased for a price of $30 each but two more units can be purchased for an additional $20 each change consumer surplus and producer surplus? Consumer surplus would decrease by $10 and producer surplus would increase by $20. Consumer surplus would increase by $10 and producer surplus would increase by $20. Consumer surplus would increase by $20 and producer surplus would increase by $20. Consumer surplus would increase by $20 and producer surplus would increase by $10. 16. Relative to standard monopoly pricing block pricing: decreases consumer surplus decreases producer surplus and decreases total surplus. decreases consumer surplus increases producer surplus and decreases total surplus. decreases consumer surplus increases producer surplus and increases total surplus. increases consumer surplus increases producer surplus and increases total surplus. 17. Which of the following results in the highest amount of producer surplus? two-part tariffs block pricing bundling third-degree price discrimination 18. Which of the following results in the highest amount of consumer surplus? first-degree price discrimination block pricing two-part tariffs third-degree price discrimination 19. Which of the following results in the highest amount of total surplus? third-degree price discrimination first-degree price discrimination block pricing bundling Show less

QUICK QUOTE

Approximately 250 words