An Informative Microeconomics Quiz!

15 Questions | Total Attempts: 119

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An Informative Microeconomics Quiz!

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Questions and Answers
  • 1. 
    The maximum price that a consumer is willing to pay for each unit bought is the ________ price. 
    • A. 

      Reservation

    • B. 

      Consumer surplus

    • C. 

      Auction

    • D. 

      Choke

    • E. 

      Market

  • 2. 
    Second-degree price discrimination is the practice of charging..
    • A. 

      Each customer the maximum price that he or she is willing to pay

    • B. 

      The reservation price to each customer

    • C. 

      Different groups of customers different prices for the same products

    • D. 

      Different prices for different blocks of the same good or service.

  • 3. 
    Third-degree price discrimination involves....
    • A. 

      Charging each consumer the same two part tariff.

    • B. 

      The use of increasing block rate pricing.

    • C. 

      Charging lower prices the greater the quantity purchased.

    • D. 

      Charging different prices to different groups based upon differences in elasticity of demand.

  • 4. 
    McDonald's restaurant located near the high school offered a Tuesday special for high school students.  If high school students showed their student ID cards, they would be given 50 cents off any special meal.  This practice is an example of: 
    • A. 

      Price discrimination

    • B. 

      Tying

    • C. 

      Two-part tariff

    • D. 

      Collusion

    • E. 

      Bundling

  • 5. 
    • A. 

      Sell less in both markets until marginal revenue is zero.

    • B. 

      Have sold more output in the local market and less at the internet auction site.

    • C. 

      Do nothing until it acquires more information on costs.

    • D. 

      Have sold less output in the local market and more on the internet auction site

    • E. 

      Sell more in both markets until marginal cost is zero.

  • 6. 
    • A. 

      The Japanese will sell steel at a higher price abroad than they will charge domestic users.

    • B. 

      The Japanese will sell more steel in Japan than they will sell abroad.

    • C. 

      The Japanese will sell more steel abroad than they will sell in Japan.

    • D. 

      The Japanese will sell steel at a lower price abroad than they will charge domestic users.

    • E. 

      Insufficient information exists to determine whether the price or quantity will be higher or lower abroad.

  • 7. 
    For a perfect first-degree price discriminator, incremental revenue is..
    • A. 

      Less than the marginal revenue for a non-discriminating monopolist.

    • B. 

      Greater than price if the demand curve is downward sloping

    • C. 

      Equal to the price paid for each unit of output.

    • D. 

      The same as the marginal revenue curve if the firm is a non-discriminating monopolist.

  • 8. 
    A firm sells an identical product to two groups of consumers, A and B.  The firm has decided that third-degree price discrimination is feasible and wishes to set prices that maximize profits.  Which of the following best describes the price and output strategy that will maximize profits? 
    • A. 

      MRA = MRB = MC.

    • B. 

      MRA = MRB.

    • C. 

      (MRA - MRB) = (1 - MC).

    • D. 

      PA = PB = MC.

  • 9. 
    Under perfect price discrimination, marginal profit at each level of output equal 
    • A. 

      P - MC

    • B. 

      P - AR

    • C. 

      P - AC

    • D. 

      0.

  • 10. 
    Under perfect price discrimination, consumer surplus..
    • A. 

      Equals zero

    • B. 

      Is maximized

    • C. 

      Is less than zero

    • D. 

      Is greater than zero

  • 11. 
    A single price monopoly that faces the demand curve P = 10 – Q  and  profit maximizes by reducing price from $6 to $5 must have a marginal cost of 
    • A. 

      1

    • B. 

      5

    • C. 

      6

    • D. 

      10

    • E. 

      None of the above

  • 12. 
    If the monopolist facing the demand curve P = 10 - Q is a perfectly discriminating monopolist and marginal cost is constant at $4, how much will the firm sell if it profit maximizes?  
    • A. 

      6

    • B. 

      5

    • C. 

      4

    • D. 

      10

    • E. 

      None of the above

  • 13. 
    • A. 

      10

    • B. 

      12

    • C. 

      13

    • D. 

      38

    • E. 

      None of the above

  • 14. 
    If the firm facing the demand curve P = 10 - Q still has zero marginal costs and is now a perfect price discriminator instead of a single price monopolist, what will profits be if fixed costs are 12?  
    • A. 

      10

    • B. 

      12

    • C. 

      13

    • D. 

      38

    • E. 

      None of the above

  • 15. 
    A firm with a demand curve P = 10 - Q is a perfect price discriminating monopolist with zero marginal costs and fixed costs of 12. Consider the following two statements comparing the price discriminating case with a single price monopolist:.                  1) In this case consumers are better off as a group because more of the product is produced.                   2) Producers are better off because they have higher profits.  
    • A. 

      Both statements are true.

    • B. 

      Only the first statement is true.

    • C. 

      Only the second statement is true.

    • D. 

      Both statements are false.