1. Which of the following is an example of price discrimination? a. Seniors paying a lower price for tickets at movie theatres b. Students paying discounted rates on travel c. Tourists p ...

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1. Which of the following is an example of price discrimination?

a.
Seniors paying a lower price for tickets at movie theatres

b.
Students paying discounted rates on travel

c.
Tourists paying higher prices on local attractions than locals

d.
All of the above
ANSWER: d
TOPICS: Section 1: Introduction
2. The practice of buying a firm’s good in one market at a low price and selling it in another market for a higher
price in order to profit from the price difference is known as

a.
Predatory pricing

b.
Price collusion

c.
Arbitrage

d.
Mark-up pricing
ANSWER: c
TOPICS: Section 1: Introduction
3. The consequences of price discrimination are

a. Consummate more transactions

b. Extract more consumer surplus

c. Increase producer surplus

d. All of the above
ANSWER: d
TOPICS: Section 1: Introduction
4. Movie theatres offer seniors discounts because

a. Seniors have a more inelastic demand for movie tickets

b. Seniors have a more elastic demand for movie tickets

c. Seniors have a higher opportunity cost of their time

d. Only B&C
ANSWER: b
TOPICS: Section 1: Introduction
5. Movie theatres offer senior discounts because

a. Seniors have a more elastic demand for movie
tickets

b. Seniors have lower incomes

c. Seniors have a lower opportunity cost of time

d. All of the above
ANSWER: d
TOPICS: Section 1: Introduction
6. Relative to simple pricing, price discrimination leads to

a. Consumer surplus being converted to producer surplus

b. Increased profits

c. A simplified pricing schedule

d. Both a and b

ANSWER: d
TOPICS: Section 1: Introduction
7. When a firm practices perfect price discrimination,

a. Consumer surplus is maximized

b. Producer surplus is minimized

c. Producer surplus is maximized

d. None of the above
ANSWER: c
TOPICS: Section 2: Why (Price) Discrimination
8. The idea behind price discrimination is

a. To be able to sell to high-value customers, who value the product most

b. To be able to sell to the marginal customers, who are indifferent about the purchase

c. To be able to sell to the low-value customers, who would otherwise not buy the product

d. To be able to sell to both high and low value customers at different prices
ANSWER: d
TOPICS: Section 2: Why (Price) Discrimination
9. Price discrimination is

a. The practice of charging different prices to different individual buyers or customer groups

b. The practice of differentiating the product to make demand less elastic

c. The practice of deciding a single price to be charged to customers

d. Always illegal
ANSWER: a
TOPICS: Section 2: Why (Price) Discrimination
10. Many bars close to campuses have started offering cheaper beer to consumers with a student ID. These bars

a. Assume students have an inelastic demand curve

b. Assume students have an elastic demand