ECON 3251 exam 3
3 examples of using discounts to reduce cost for consumers - correct answer-coupons,
reverse auctions, and rebates
A cartel is more likely - correct answer-its easy to detect cheating on the cartel agreement
A drug company may charge more after it goes off patent if - correct answer-the demand
curve is less elastic at the new optimum
A firm is a natural monopoly if - correct answer-one firm can produce the total output of the
market at lower cost than two or more firms could
A firm operating in the upward sloping portion of its average cost curve - correct answer-can
be a natural monopoly if production occurs significantly close to the region of economies of
scale
A grocery store could increase profits by using past purchase data to charge lower prices to
customers whose demand is relatively more ______________ - correct answer-elastic
Agreeing to matching lower prices reported by customers - correct answer-helps detect
cheating on the cartel agreement
Alexx monopoly currently sells product at single price. What conditions must be met so they
can profitability price discriminate? - correct answer-The ability to set price, consumers with
different price elasticities, the ability to identify different types of consumers and the ability to
prevent or limit sales
An example of where both group price and nonlinear price discrimination simultaneously
being used includes - correct answer-supermarkets, movie theaters, and amusement parks
Are major league baseball clubs maximizing monopolies? Why is this a relevant test? What
would the elasticity be if baseball clubs were maximizing revenue - correct answer-If a firm
were operating in the inelastic portion of the demand curve, it could raise price and increase
profit. Revenue is maximized when elasticity equals -1
Buyers can gain advantage in cartels by - correct answer-no poaching agreements
Charging different prices to rent a ford focus to two different types of customers is - correct
answer-price discrimination because hertz is taking advantage of different demand curves of
business travelers and leisure travelers
Charging more for luxury cars than rent compact cars - correct answer-is not price
discrimination if the costs of supplying the two cars differ
Coke and pepsi advertise bottled water to - correct answer-differentiate their products
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