管理经济学第七版英文教辅 chapter 10.docx

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1、Managerial Economics 7e (Keat)Chapter 10 Special Pricing PracticesMultiple-Choice Questions1) A cartel is defined to beA) any oligopolistic industry with fewer than 4 firms.B) a form of oligopoly in which firms agree to sell at different prices like in monopolistic competition.C) a form of oligopoly

2、 in which firms formally agree to establish a common strategy, often a common price, in effect acting like a monopoly.D) a form of oligopoly in which firms agree to compete with each other on an equal basis.Answer: CDiff: 12) A successful and stable cartel can be established if there areA) many firm

3、s producing a storable product.B) many firms producing a perishable product.C) a few firms producing a storable product.D) a few firms producing a perishable product.Answer: CDiff: 23) All of the following are conditions which are favorable to the formation of cartels exceptA) the existence of a sma

4、ll number of firms.B) geographic proximity of firms.C) homogeneity of the product.D) easy entry into the industry.Answer: DDiff: 24) Prices under an ideal cartel situation will be equal toA) monopoly prices.B) competitive prices.C) prices under monopolistic competition.D) marginal cost.Answer: ADiff

5、: 25) A cartel price will be established at the quantity whereA) total cost equals the industry total revenue.B) average cost equals the industry revenue.C) the sum of the members* marginal costs equals industry marginal revenue.D) marginal cost equals industry price.Answer: C4) A monopolist sells t

6、o two consumer groups, students and non-students.Demand for students: Q = 500 - 1/2PDemand for non-students: Q = 750 - 2PMC = 20Find the profit-maximizing price/quantity combination in each market if the groups can be separated.Answer:Students:P= 1000-2QMR = 1000 - 4QSet MR = MC. 20 = 1000- 4Q245 =

7、Q,P = $510Non-students:P = 375 - 1/2 QMR = 375 - QSet MR = MC. 20 = 375 - Q355 = Q,P = $197.505) McDonalds charges a higher price for a Big Mac in New York City than it does in a small town in Iowa. Is this an example of third-degree price discrimination? Explain.Answer: No, or not necessarily. Cost

8、s differ between the two markets, because land is more expensive in New York City. Thus the higher price reflects that.6) Some charge that third-degree price discrimination is unfair or that it reduces social welfare. Why does charging one group a lower price hurt anyone?Answer: Theres an equity iss

9、ue about charging different prices to different people, but the real social welfare issue is not about charging a lower price to one group; its about charging a higher price to the other. If the firm charged a single price, it would be somewhere in between the two group prices, in most cases. So som

10、e customers who would be able to buy at a lower price in the combined market pay more (or do not buy at all) in the separated market.7) Firms that make game systems like Playstation and Nintendo typically charge a price close to average cost on the game system itself, and do not change that price ev

11、en when the systems are scarce or demand increases. Why might this be a profit-maximizing strategy?Answer: These firms are selling two products, the systems and the games. These are complementary products. If they increase the price of the systems, they reduce the demand for games (and games are rep

12、eat purchases rather than one-time purchases). Additionally, the system is the hook,” or the loss leader that draws customers in. Once you have the system, the switching cost of moving to another system is significant. Thus the systems are cheap, and the games are expensive.8) In the Sunday newspape

13、r, there are usually coupons that you can clip and take to the store to save money on products. Anyone can buy a newspaper, and the value of the coupons easily exceeds the price of the newspaper for most consumers. Is this an example of price discrimination? Explain.Answer: Yes, it is. Consumers wit

14、h more time are likely to have a more elastic demand for products, and thus they are willing to clip the coupons (and may not buy except at the lower price). Other consumers with less time wont deal with the coupons and thus will pay a higher price. This is essentially the same idea as movie matinee

15、 pricing.9) Would it ever make sense for a firm to charge a price at or below the cost of the product? Answer: This might be an example of penetration pricing in which the firm is trying to gain market share. (Two other reasons not discussed in the text: limit pricing to prevent entry, and predatory

16、 pricing to drive out rivals.)10) Superstar actors typically get contracts that specify that they get a percentage of nthe gross/ the total revenues that the movie brings in. Why might actors want contracts structured that way? Why might producers be willing to agree to that, and how does this make

17、the goals of actors and producers different?Answer: Actors want to maximize revenue with this sort of contract, while producers wish to maximize profit. It is clearly advantageous to the actor, since cost overruns wont impact what they receive. But it might also suit producers, because if actors are

18、 interested in maximizing revenue, they have an incentive to promote the movie and try to increase sales (and to do a product job). This might be more of an incentive than a cut of the profits, over which they have less control.11) A firm in an oligopolistic industry has the following demand and tot

19、al cost equations:P = 600 - 20Q and TC = 700 + 160Q + 15Q2Calculate:a. quantity at which profit is maximizedb. maximum profitc. quantity at which revenue is maximizedd. maximum revenuee. maximum quantity at which profit will be at least $580f. maximum revenue at which profit will be at least $580 An

20、swer: If revenue and cost schedules are calculated:a. 6; b. 680; c. 15; d. 4500; e. 8; f. 3520If results are calculated with equations:a. 6.286; b. 682.86; c. 15; d. 4500; e. 8; f. 352012) A monopolistic firm operates in two separate markets. No trade is possible between market A and market B. The f

21、irm has calculated the demand functions for each market as follows:Market A p = 15 - Q; Market B p = 11 - QThe company estimates its total cost function to be TC = 4Q. Calculate:a. quantity, total revenue and profit when the company maximizes its profit and charges the same price in both marketsb. q

22、uantity, total revenue and profit when the company charges different prices in each market and maximizes its total profitAnswer: If revenue and cost schedules are calculated:a. Q = 9; p = 8.5; TR = 76.5; TC = 36; profit = 40.5b. Market A:Q = 5 to 6; p = 9 to 10; TR = 50 to 54; TC = 20 to 24; profit

23、= 30Market B:Q = 3 to 4; p = 7 to 8; TR = 24 to 28; TC = 12 to 16; profit = 12Combined profit = 42If equations are used:a. Q = 9; p = 8.5; TR = 76.5; TC = 36; profit = 40.5b. Market A:Q = 5.5; p = 9.5; TR = 52.25; TC = 22; profit = 30.25Market B:Q = 3.5; p = 7.5; TR = 26.25; TC = 14; profit = 12.25C

24、ombined profit = 42.513) Briefly describe the conditions under which cartels will be formed.Answer: An industry with relatively few firms selling identical or very similar products, where entry is very difficult and cost structures are very similar. Also, geographic proximity of the firms is very he

25、lpful.14) Explain the reasons firms might follow the Baumol model of maximizing revenue subject to achieving a minimum level of profits.Answer: Firms might wish to increase their market shares within the industry, managers* power and prestige tend to grow with an increase in the size of a business*

26、level of operations, eschewing profit maximization might avoid new firms entering the industry and/or pressure for government regulation, and increases in the scale of a firms level of operation might permit capturing cost economies of scale through greater market power to extract lower prices from

27、the firms suppliers of inputs.15) Describe the circumstances under which a producer of joint products in fixed proportions might not sell all of one of the available joint products at the profit-maximizing level of operations.Answer: At the profit-maximizing level of output, the demand for that join

28、t product would be such that the price at which it could be sold would involve negative marginal revenue and, hence, a reduction in total profits. Thus sales would be limited to an amount where the last unit sold brings in zero marginal revenue and the remaining units would not be sold (they could b

29、e held for sale at a later date if the price might be expected to increase and if the costs of holding the unsold product were less the present value of the expected revenue; otherwise the unsold product would be destroyed).Diff: 26) Cartel agreements tend to break downA) during economic downturns.B

30、) because of price chiselingH by one or more members.C) when there is overcapacity in the industry.D) All of the aboveAnswer: DDiff: 27) The position of a cartel will become weaker if there is excess-capacity among thefirms belonging to the cartel.minimumAnswer: DDiff: 18) Barometric price leadershi

31、p exists whenA) one firm in the industry initiates a price change and the others may or may not follow.B) one firm imposes its best price on the rest of the industry.C) when all firms agree to change prices simultaneously.D) when one company forms a price umbrella for all others.Answer: ADiff: 19) B

32、arometric price leadership can occur when oligopolistic firmsA) compete on the basis of differentiated products.B) want to avoid price competition and violating antitrust laws.C) try to enforce cartel agreements.D) All of the aboveAnswer: BDiff: 110) Dominant price leadership exists whenA) one firm

33、drives the others out of the market.B) the dominant firm decides how much each of its competitors can sell.C) the dominant firm establishes the price at the quantity where its MR = MC, and permits all other firms to sell all they want to sell at that price.D) the dominant firm charges the lowest pri

34、ce in the industry.Answer: CDiff: 211) The oligopolistic situation in which a companys objective is to maximize revenue subject to a minimum profit requirement is usually referred to asA) the aggregate model.B) the Baumol model.C) the aggressive model.D) the Marshall model.Answer: BDiff: 112) In the

35、 Baumol model, the total quantity sold will usually be larger thanA) if perfect competition prevailed.B) if total costs were minimized.C) if profit were maximized.D) if companies were interdependent.Answer: CDiff: 113) In the Baumol model, a change in fixed costs willA) increase total quantity sold.

36、B) have no effect on total quantity sold.C) decrease total quantity sold.D) have an effect on total quantity sold.Answer: DDiff: 214) In order for price discrimination to existA) markets must be capable of being separated.B) markets must be interdependent.C) different demand price elasticities must

37、exist in different markets.D) demand price elasticities must be identical in all markets.E) Both A and CAnswer: EDiff: 315) The result for the seller of being able to practice price discrimination will beA) higher profits.B) lower demand elasticity.C) lower quantity sold.D) cost minimization.Answer:

38、 ADiff: 116) The practice by a monopolist of charging each buyer the highest price he/she is willing to pay is calledA) first-degree discrimination.B) second-degree discrimination.C) third-degree discrimination.D) fourth-degree discrimination.Answer: ADiff: 117) When state universities charge higher

39、 tuition fees to out-of-state students than to local students, the universities are practicingA) first-degree discrimination.B) second-degree discrimination.C) third-degree discrimination.D) fourth-degree discrimination.Answer: CDiff: 218) The following are possible examples of price discrimination

40、exceptA) prices in export markets are lower than for identical products in the domestic market.B) senior citizens pay lower fares on public transportation than younger people at the same time.C) a product sells at a higher price at location A than at location B, because transportation costs are high

41、er from the factory to A.D) subscription prices for a professional journal are higher when bought by a library than when bought by an individual.Answer: CDiff: 319) Under conditions of first-degree price discriminationA) production will equal that which would exist under perfect competition.B) produ

42、ction will exceed that which would prevail under perfect competition.C) prices will be lower than under perfect competition.D) production will always be lower than under perfect competition.Answer: ADiff: 220) Second-degree price discrimination occurs whenA) different prices are charged for differen

43、t blocks of services.B) different groups of buyers are charged different prices based on their price elasticities of demand.C) a different price is charged for each amount of a product purchased.D) None of the aboveAnswer: ADiff: 221) Third-degree price discrimination exists whenA) the seller knows

44、exactly how much each potential customer is willing to pay and will charge accordingly.B) different prices are charged by blocks of services.C) when the seller can separate markets by geography, income, age, etc., and charge different prices to these different groups.D) when the seller will bargain

45、with buyers in each of the markets to obtain the best possible price.Answer: CDiff: 222) By far, the most frequently encountered price discrimination is theA) first-degree price discrimination.B) second-degree price discrimination.C) third-degree price discrimination.D) fourth-degree price discrimin

46、ation.Answer: CDiff: 223) If a product which costs $8 is sold at $10, the profit margin isA) $2.B) 25%.C) 20%.D) None of the aboveAnswer: CDiff: 224) If a product which costs $8 is sold at $ 10, the mark-up isA) $2.B) 25%.C) 20%.D) None of the aboveAnswer: BDiff: 225) The correct expression for cost

47、 plus pricing isA) Price = Cost (1 + profit margin).B) Price = Cost + profit margin.C) Price = Cost (1 + mark-up).D) Price 二 Cost + (1 + mark-up).Answer: CDiff: 326) If the demand elasticity for a product is -2, and a profit-maximizing firm sells the product for $10, its marginal cost must beA) $5.B

48、)$10.C)$15.D) $8.Answer: ADiff: 327) When mark-up equals 50% and AC 二 MC, then demand elasticity will beA)-l.B)-1.5.C) -2.D) -3.Answer: DDiff: 328) The pricing of a product at each stage of production as the product moves through several stages is calledA) transfer pricing.B) cost plus pricing.C) penetration pricing.D) monopolistic pricing.Answer: ADiff: 129) Tran