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| 5591414532 | A price-discriminating firm earns a higher profit from price discrimination because: | - It charges a higher price to customers who are willing to pay more than the uniform price, capturing some or all of their consumer surplus. - It also sells to some people who are not willing to pay as much as the uniform price. | 0 | |
| 5591425495 | Three conditions for who can price discriminate: | - A firm must have market power. - Consumers must differ in their sensitivity to price, and a firm must be able to identify how consumers differ in this sensitivity - A firm must be able to prevent or limit resales | 1 | |
| 5591430805 | Perfect price discrimination (first-degree price discrimination) | A situation in which a firm sells each unit at the maximum amount any customer is willing to pay for it, so prices differ across customers and a given customer may pay more for some units than for others | 2 | |
| 5591435956 | Quantity discrimination (second-degree price discrimination) | A situation in which a firm charges a different price for large quantities than for small quantities but all customers who buy a given quantity pay the same price. | 3 | |
| 5591439589 | Multi-market price discrimination (third-degree price discrimination) | A situation in which a firm charges different groups of customers different prices but charges a given customer the same price for every unit of output sold. | 4 | |
| 5591446622 | Reservation Price | The maximum amount a person would be willing to pay for a unit of output | 5 | |
| 5591451058 | If a firm with market power knows exactly how much each customer is willing to pay for each unit of its good and it can prevent resale... | the firm charges each person his or her reservation price. | 6 | |
| 5591454108 | A perfect price discrimination equilibrium is... | efficient and maximizes total welfare. | 7 | |
| 5591456287 | Perfect price discrimination equilibrium differs from the competitive equilibrium in two ways: | - perfect price discrimination equilibrium, only the last unit is sold at that price - perfectly price-discriminating monopolies capture all the welfare | 8 | |
| 5591466727 | Most customers are willing to pay more for the first unit than for... | successive units: (the typical customer's demand curve is downward sloping) | 9 | |
| 5591469135 | Block-Pricing Schedules | Charge one price for the first few units (a block) and a different price for subsequent blocks. - First 20: $70 - Second 20: $50 - Third 20: (no profit at $30) | 10 | |
| 5591478719 | The most common method of multi-market price discrimination is to... | divide potential customers into two or more groups and set a price for each group. | 11 | |
| 5591483206 | The two approaches to divide customers into groups are: | - to divide buyers into groups based on observable characteristics of consumers (age, income, location, ect., ...) - or to identify and divide consumers on the basis of their actions | 12 | |
| 5591495071 | Tie-In Sale | A type of pricing strategy in which customers can buy one product only if they agree to buy another product as well. | 13 | |
| 5591498505 | Bundling (package tie-in sale) | - A type of tie-in sale in which two goods are combined so that customers cannot buy either good separately. - Bundling a pair of goods pays only if their demands are negatively correlated | 14 | |
| 5591506163 | A monopoly advertises to... | raise its profits. | 15 | |
| 5591509511 | A successful advertising campaign... | shifts the market demand curve by changing consumer's tastes or informing them about new products. | 16 | |
| 5591512958 | If advertising shifts the demand curve outward,... | the firm's profit must rise. | 17 | |
| 5591515337 | The firm undertakes this advertising campaign only if... | it expects its net profit (gross profit minus the cost of advertising) to increase. | 18 |
