- In the case of a perfectly price-discriminating monopoly, there is:
A. as much consumer surplus as in the case of perfect competition. B. zero consumer surplus. C. as much consumer surplus as in the case of monopolistic competition. D. as much consumer surplus as in the case of a standard monopoly.
- The textbook for your economics class is available in an American version and in a much cheaper Indian version that has the same text but no colors for the graphs (the difference in prices is much higher than the difference in costs). Why is this the case?
A. No one in India has any use for color graphs. B. Demand in the United States is much more inelastic than demand in India. C. There are more substitutes for your textbook in the United States. D. Demand in the United States is much more elastic than demand in India.
- If students in the United States go online and import the much cheaper Indian version of your textbook instead of buying the American edition, how might this arbitrage nevertheless help the publisher of your textbook?
A. It makes the prices in India and the United States more equal. B. It saves money on the color ink for the graphs. C. The students who go to the trouble to do this might have had low willingness-to-pay in the first place, so the arbitrage enables another layer of price discrimination. D. The students who go to the trouble to do this might resell the books for the higher American price and make a profit.
- Some bars host a ?ladies' night,? on which women get drinks free or at a discount. Aside from differing elasticities of demand, why might bars want to charge a lower price to women than to men?
A. An increased quantity of drinks sold to women will attract male customers. B. An increased quantity of drinks sold to men will attract female customers. C. Men cost less to serve than women do. D. It is difficult to arbitrage drinks.
- Writing in 1849, Jules Dupuit observed why the rail companies actively made third-class accommodations terrible, including removing the roof from the car and having nonupholstered seats:
?It is not because of the several thousand francs which they would have to spend to cover the third-class wagons or to upholster the benches that a particular railway has uncovered carriages and wooden benches; it would happily sacrifice this for the sake of its popularity. . . It hurts the poor not because it wants them to personally suffer, but to scare the rich.?
How does ?scaring the rich? illustrate price discrimination?
A. It deters those who are willing to pay more from going to third class. B. It creates profit opportunities by bundling services. C. It encourages consumers with a low willingness to not travel at all. D. It uses tying to charge more for people who ride the train a lot.
- Adults have more money than teenagers and perhaps more inelastic demand for video games than teenage video gamers. Why might it be difficult to price discriminate based on this fact?
A. It is not true that adults have more money than teenagers. B. Teenage gamers could exploit arbitrage opportunities, buy games at the low price, and re-sell them to adult gamers. C. The monopolist might not want to segment the market. D. It is impossible to tell who is a teenager and who is an adult.
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