Canvas 9 Quiz

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Feb 20, 2024

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Canvas 9 Quiz Question 1 In the model of Mickey Mouse pricing with homogeneous consumers, the price per unit is Equal to marginal cost Below marginal cost Above marginal cost Equal to consumer surplus Question 2 In the model of Mickey Mouse pricing with homogeneous consumers, entry fee is Bigger than consumer surplus Equal to consumer surplus Smaller than consumer surplus Equal to marginal cost Question 3 In the model of Mickey Mouse pricing with two types of consumers, one with small demand and one with large demand, the price is Below marginal cost Equal to marginal cost Equal to consumer surplus Above marginal cost Question 4 In the model of Mickey Mouse pricing with two different consumers, one with small demand and one with large demand, let CSL denote consumer surplus of the large consumer and CSS denote consumer surplus of the small consumer. Let F denote the entry fee. Then we have F = CSS + CSL F = CSL- CSS F = CSS F = CSL Question 5 In the model of Mickey Mouse pricing with two different consumers, one with small demand and one with large demand, increasing the price above marginal cost, (all relative to the case where price is equal to marginal cost) Decreases revenue from the small consumer and decreases revenue from the large consumer

Decreases revenue from the small consumer and increases revenue from the large consumer Increases revenue from the small consumer and decreases revenue from the large consumer Increases revenue from the small consumer and increases revenue from the large consumer Question 6 Imagine that Melissa will host an art show in Bloomington 60 days from now. She sells tickets to that event every day up to the day of the show. There is a fixed number of spaces and hence tickets to be sold. She has two pricing strategies in mind: (i) intertemporal price discrimination or (ii) dynamic pricing. The number of tickets Will be the same in both Will be higher under (i) than (ii) Will be equal to capacity under option (i) Will be lower under (i) than (ii) Question 7 Imagine that Melissa will host an art show in Bloomington 60 days from now. She sells tickets to that event every day up to the day of the show. There is a fixed number of spaces and hence tickets to be sold. If Melissa practices static pricing, then Her prices will respond to changes in demand Her profit will be maximized None of the above or below The event will be sold out Question 8 Which one is NOT a consequence of static pricing? Constant prices in the secondary market The event will be sold out None of the above or below The emergence of a secondary market Question 9 In the prisoners’ dilemma game, pdg, There is one efficient equilibrium There are two efficient equilibria There are two inefficient equilibria There is one inefficient equilibrium Question 10 In the game of chicken

There is one equilibrium None of the above or below There are three equilibria There are two equilibria Question 11 In the game of chicken One equilibrium is efficient, and one equilibrium is inefficient The two equilibria are efficient None of the above or below The two equilibria are inefficient Question 12 If you are to meet your friend from Purdue on the IU campus at noon on Monday of the first week of class, but you have not told him the precise place to meet, and you have no way to communicate with your friend, which one of the following would not be a good place to look for your friend? The office of your career counselor All of the above and below A lab in the chemistry building The classroom for you Anthropology class Question 13 In a Nash equilibrium in a two-person game Each player tries to maximize the sum of their profits Each player tries to maximize his/her/their profit independent of what the other player does. Each player tries to do better than the other player Each player tries to maximize his/her/their profit, assuming the other player is trying to do the same. Question 14 Backward induction in a finitely repeated prisoners’ dilemma game is A method to calculate the Nash equilibrium None of the above or below A strategy that helps a player to get higher profit than the owner A strategy that helps to maximize profits Question 15 Imagine a monopolist who has the following pricing choices: (i) perfect price discrimination or personalized pricing or (ii) segmenting the market into a small number, like 4 or 5, segments. Then The profit in the second case is always negative

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Profit in case (i) is lower than in case (ii) The profit is equal in both cases Profit in case (i) is higher than in case (ii) Question 16 Which of the following are not required to practice market segmentation Distinguishing several different demand curves for the product Marginal costs are constant Different demand elasticities for the product Transfer of the good between the market segments must be very costly Question 17 If you are playing a repeated prisoners’ dilemma game with me for 100 rounds and after 20 rounds you are certain that I am playing “tit for tat” then Then your pay-off will always be lower than mine Then the best you can do is also play “tit for tat” Then the best you can do is make as much as I do Then you can obtain a higher pay-off than I in a direct comparison Question 18 Consider a monopolist who is practicing perfect price discrimination. Then The output level is the same that would be attained in a competitive market. The output level will be above, below, or the same as the efficient level, depending on the overall elasticity of demand. The output level is above the efficient level The output level is below the efficient level Question 19 Consider two firms that sell an identical good. The marginal cost of the good is $3. Each one of the two firms chooses a price for the product, to maximize its profit, assuming that the other firm does the same. The two firms consider all prices between $1 and $10. In this game the only Nash equilibrium is (where prices are in dollars) (4, 4) (2, 2) (6, 6) (3, 3) Question 20 Consider a monopolist who is faced with a price ceiling below the monopoly price. Then

Output will increase All of the above and below The monopolist will produce where the price ceiling hits demand The marginal revenue is given by the price ceiling

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