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##### 15 multiple choice questions needs only solutions.

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Question 1;After acquiring a substitute product, to achieve greater profitability, one should;a. Raise price on both products, but raise price more on the less price elastic product;b. Raise price on both products, but raise price more on the more price elastic product;c. Raise price on just the more price elastic;d. Raise price on just the less price product;Question 2;Firms tend to raise the price of their goods after acquiring a firm that sells a substitute;good because;a. There is an increase in the overall demand for their products;b. They lose market power;c. The bundle has a more inelastic demand than individual goods;d. The bundle has a more elastic demand than individual goods;Question 3;Firms tend to lower the price of their goods after acquiring a firm that sells a;complementary good because;a. There is an increase in the overall demand for their products;b. They gain market power;c. The bundle has a more inelastic demand than individual goods;d. The bundle has a more elastic demand than individual goods;Question 4;If promotional expenditures make demand;a. Less elastic, then you should reduce price when you promote the product;b. More elastic, then you should increase price when you promote the product;c. More elastic, then you should reduce price when you promote the product;d. Less inelastic, then you should increase price when you promote the product;Question 5;Domino Sugar Company is considering buying Fisher Honey Company for \$100 million.;Based on information obtained from 500 supermarkets around the country, when the;price of 1 lb. of Domino Sugar went on sale from \$2.00 to \$1.50, the average number of 1;lb. boxes of sugar rose from 200 boxes in a week to 300 boxes. The following week;when 1 lb. boxes of Fisher Honey went on sale for \$2.50 from the original price of \$3.00;the number of boxes of honey sold increased from 200 to 275 boxes. If the sale of Fisher;Honey to Domino Sugar goes through, what changes to each products price Domino;Sugar make?;a. Increase the price of both, but increase the price of Fisher Honey more;b. Increase the price of both, but increase the price of Domino Sugar more;c. Lower the price of both;d. No change;Question 6;For a firm to maximize total profits through price discrimination, it should;a. Charge the same price to both sets of consumers by maximizing at MR=MC on the;inelastic demand;b. Charge a high price to consumers with an inelastic demand and low price to consumers;with an elastic demand;c. Charge the same price to both sets of consumers by maximizing at MR=MC on the;elastic demand;d. Charge a low price to consumers with an inelastic demand and high price to consumers;with an elastic demand;Question 7;Assume that the price elasticity of demand for movie theatres is -.85 during all evening;shows but for all afternoon shows the price elasticity of demand is -2.28. For the theatre;to maximize total revenue, it should;a. Charge a higher price for the afternoon shows and lower price for the evening shows;holding other things constant;b. Charge a lower price for the afternoon shows and higher price for the evening shows;holding other things constant;c. Need more information;d. Charge the same price for both shows, holding other things constant;Question 8;In theory, price discrimination;a. Decreases consumer surplus;b. Reduces the number of consumers who purchase the firms product;c. Has no effect on deadweight loss;d. Decreases producer surplus;Question 9;Charging prices closer to what consumers are willing to pay for a good;a. None of the above;b. Reduces consumers surplus and Increases producer surplus;c. Increases producer surplus;d. Reduces consumers surplus;Question 10;When a firm practices perfect price discrimination;a. Producer surplus is maximized, and demand curve is marginal revenue curve;b. Producer surplus is maximized;c. The demand curve is very elastic;d. The demand curve is the marginal revenue curve;e. Producer surplus is minimized;Question 11;Indirect price discrimination differs from direct price discrimination because;a. In direct price discrimination there is a risk of creating profitable entries for rival but;for indirect price discrimination, this can be avoided;b. In Direct price discrimination firms do not have to worry about cannibalizing;c. In direct price discrimination high value consumers can sometime enjoy the benefits of;a low-values customer;d. There is no difference between the two;Question 12;Firms can practice indirect price discrimination by;a. All of them;b. Offering volume discounts;c. Offering a bundle containing a number of units;d. Using two-part pricing;Question 13;When a firm practices perfect price discrimination;a. The demand curve is very elastic;b. The marginal cost curve is the average cost curve;c. The demand curve is the marginal revenue curve;d. The demand curve is very inelastic;Question 14;The higher cost for a refundable airline ticket for business travelers can be explained by;a. Bundling;b. Price discrimination;c. Indirect price discrimination;d. Marginal revenue vs. marginal cost;Question 15;Why might a company use an indirect price discrimination scheme versus direct price;discrimination?;a. The demand for each customer type is the same;b. The company can prevent arbitrage between its different customer types;c. The different customer types cannot be uniquely identified directly;d. The different customer types shop at different stories

Paper#18335 | Written in 18-Jul-2015

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