Monopoly: End of Chapter Problem5. Firms use price discrimination to increase their profits by converting part or all of consumer surplus to producer surplus.Which of the following market conditions is not necessary for a firm to engage in price discrimination?O A firm must have the ability to prevent arbitrage.A firm must have the ability to separate consumers intoigroups based on their elasticities of demand.O A firm must have the ability to hide their prices from consumers.A firm must have some market power.Publisher: Worth Publishers7:41 PMQuestion Source: Chiang 4e - Economics Principles For A Changing World39°FA O 1 a I E 4)2312/12/2021a Question 13 of 14<>13. In 2015, United Airlines and Orbitz Travel sued a 22-year-old person who created the Web site skiplagged.com aimed athelping travelers save money using a technique called "hidden-city ticketing" (CNN Business, May 1, 2015). Hidden-cityticketing works when a passenger wants to travel nonstop between an airline's major hubs but can find a less expensive fare bybooking a connecting flight. The passenger travels on the first leg of the flight and does not take the connecting flight.An example would be a passenger who wanted to travel from Houston to Denver on United Airlines. The website might find acheaper fair available from Houston to Colorado Springs with a connection in Denver. The passenger can purchase the cheaperflight, fly the first leg, and stay in Denver.Why would an airline charge more for a single flight than one that continues onwards to another destination?Airlines prefer that customers take as many flights as possible because they can charge fees for inflight services.Airlines are competitive and believe charging a higher price will cause the other airlines to charge higher prices as well.Airlines charge a higher price because the cost of flying nonstop requires more fuel and maintenance.Airlines charge a higher price for nonstop flights because they face little competition from other airlines that requirestops at their own hubs.Question Source: Chiang 4e - Economics Principles For A Changing WorldPublisher: Worth Publishers Ya7:42 PME 4)12/12/20213639°F23

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5. Firms use price discrimination to increase their profits by converting part or all of consumer surplus to producer surplus. Which of the following market conditions is not necessary for a firm to engage in price discrimination? OA firm must have the ability to prevent arbitrage. O A firm must have the ability to separate consumers intogroups based on their elasticities of demand. A firm must have the ability to hide their prices from consumers. O A firm must have some market power.

5. Firms use price discrimination to increase their profits by converting part or all of consumer surplus to producer surplus. Which of the following market conditions is not necessary for a firm to engage in price discrimination? OA firm must have the ability to prevent arbitrage. O A firm must have the ability to separate consumers intogroups based on their elasticities of demand. A firm must have the ability to hide their prices from consumers. O A firm must have some market power.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Which of the following describes bundling as a form of price discrimination? O a. Customers with similar demographic characteristics are grouped together. O b. Customers with similar preferences are put in groups, each with a set price. O C. Different products are sold together at a cheaper total price than if sold separately. O d. A product is sold at a lower per-unit price if several units are bought together.
b. Suppose a price-discriminating monopoly has segregated its market into two submarkets and can prevent resale between the two. Assume that its marginal cost is constant and equal to its average total cost of $8. The firm's demand schedule for the first group is given by the first two columns of the following table. Output Price MR TR AR 24 1 22 20 3 18 4 16 5 14 12 7 10 8 8
You are given this demand schedule for new boats. Which of the following demand curves accurately represents the demand schedule and has proper formatting? The demand schedule for new boats Price ($) Quantity Demanded $500 5500 $1000 5000 $1500 4500 $2000 3500 $2500 3000 $3000 2000 $3500 1000 $4000 150 O 3100 10 NEW 3000 1000 THE None of the demand curves accurately represent the data in the schedule 9000 1000 3000 2000 . 1000 New Boats 1000 4000 New Boats Demanded New Boats 200 6000 7000
250 225 Revenue Lost 200 175 150 Revenue Gained 125 Demand 100 75 50 25 3 4 7 8 9. 10 QUANTITY (Fire engines) Gilberto increase production from 7 to 8 fire engines because the dominates in this scenario. True or False: If Gilberto's Fire Engines were a competitive firm instead and $100,000 were the market price for an engine, decreasing its price from $100,000 to $50,000 would result in the same change in the production quantity and, thus, total revenue. O True O False acer Σ 2. 1. PRICE (Thousands of dollars per fire engine)
Suppose that a company operates in the monopolistically competitive market for electric razors. The following graph shows the demand curve, marginal revenue (MR) curve, marginal cost (MC) curve, and average total cost (ATC) curve for the firm. Place a black point (plus symbol) on the graph to indicate the long-run monopolistically competitive equilibrium price and quantity for this firm. Next, place a grey point (star symbol) to indicate the minimum average total cost the firm faces and the quantity associated with that cost. PRICE (Dollars per razor) 100 90 8 70 60 50 40 30 20 10 0 D MO 10 ATC MR 20 30 40 50 60 70 QUANTITY (Thousands of razors) 60 Demand 90 100 Mon Comp Outcome Min Unit Cost
When price discriminating by group, firms want to charge higher prices to customers with... O less elastic demand O more elastic demand O more elastic supply O less elastic supply
22. Suppose the firm in the figure below sets a uniform price for its product. Please show the steps. a. If the firm chooses to set a uniform price for its product, then the profit-maximizing price is $________ and ________ units will be sold. Under this uniform pricing policy, the maximum possible profit is $________. b. The maximum profit the firm could earn if the firm sells 2,000 units and is able to charge the demand price for every one of the 2,000 units it sells is $ ________. c. For the additional number of units sold by expanding output to 2,000 units (from the output level in part a), the consumer surplus that could be captured if it were possible to charge the demand price on every one of those units would amount to $________.
If a monopolist faces an inverse demand curve, p(y) = 100-2y and has constant marginal costs of $32 and zero fixed costs and if this monopolist is able to practice perfect price discrimination, its total profits will be O a. $1,156. O b. $17. O c. $578. O d. $1,734. O e. $289.
e ap sep 0 ja ajaloo Purwas ap o Consider a town in which only two residents, Clancy and Eileen, own wells that produce water safe for drinking. Clancy and Eileen can pump and sell as much water as they want at no cost. For them, total revenue equals profit. The following table shows the town's demand schedule for water. Tab Caps Lock Price (Dollars per gallon) 6.00 5.50 5.00 4.50 Esc is 81°F Sunny 4.00 3.50 3.00 2.50 2.00 1.50 1.00 ! 0.50 0 7 Q A Quantity Demanded (Gallons of water) 0 45 17 F2 8- @ Suppose Clancy and Eileen form a cartel and behave as a monopolist. The profit-maximizing price is $ gallons. As part of their cartel agreement, Clancy and Eileen agree to split production equally. Therefore, Clancy's profit is - C VE 2 W 90 135 S. 180 225 270 315 360 405 450 495 540 F3 0+ #M 3 Total Revenue (Dollars) 0 $247.50 $450.00 $607.50 $720.00 $787.50 $810.00 $787.50 $720.00 $607.50 E F4 BO $450.00 $247.50 0 D $ 4 F5 R F % 5 F6 D T F7 ^ 6 G 4- Y FB J+ & 7 per gallon, and the total…
2. The market for EpiPens Consider the pharmaceutical company Mylan that produces epinephrine injection devices called EpiPens. In the presence of other firms producing substitutes for this good, the price of EpiPens is $150. Now suppose that competitors to Mylan no longer produce epinephrine injection devices, so Mylan now has pricing power in this market. As the economist on staff at Mylan, you are charged with the task of figuring out what your company's new pricing strategy should be. The following graph shows the marginal cost (MC), which is assumed to be constant, and the average total cost (ATC) of Mylan. The graph also shows the demand curve (D) for EpiPens and the marginal revenue curve (MR) once the firm has market power. On the graph, use the grey point (star symbol) to indicate the quantity of EpiPens demanded if Mylan continues to charge $150. Dashed drop lines will automatically extend to both axes.
QUESTION 10 For a monopoly firm: O A. total revenue is a straight, O B. the marginal revenue curve lies O C. the marginal revenue curve lies O D. the marginal revenue curve lies upsloping line because a firm's sales are independent of product price above the demand curve because any below the demand curve because below the demand curve because reduction in price applies to all units any reduction in price applies to any reduction in price applies only to the extra unit sold sold all units sold
2) ABC Corp. is selling a children's alphabet book and an iPad app. Suppose the reservation prices for four consumers are given by the table below: Aaron Cost Betsy Carolyn Desmond Book 11 12 7 4 3 App 5 2 9 10 1 a) If ABC prices them separately, what prices should it charge, and how much profit does it make? b) If the Corp. prices the products as a bundle, and only offers the bundle, what price should it charge and how much profit does it make? c) If ABC Corp. offers the book or app separately but also offers a bundle, what prices should it charge, and how much profit does it make?