1) Adults have more money than teenagers and perhaps more inelastic demand for v

Question

1) 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. Teenage gamers could exploit arbitrage opportunities, buy games at the low price, and re-sell them to adult gamers. B. It is not true that adults have more money than teenagers. C. It is impossible to tell who is a teenager and who is an adult. D. The monopolist might not want to segment the market.

#2 A museum in Russia has two entrances: one for locals (written in Russian) and one for tourists (written in English). People who enter through the entrance written in Russian will end up paying 81.93 Rubles ($3.00). English-speaking tourists will use the entrance written in English, but they will end up paying 409.67 Rubles ($15.00). This practice is an example of: A. price manipulation. B. international price mediation. C. price exploitation. D. price discrimination.

#3 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 saves money on the color ink for the graphs. B. 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. C. The students who go to the trouble to do this might resell the books for the higher American price and make a profit. D. It makes the prices in India and the United States more equal.

#4 In the case of a perfectly price-discriminating monopoly, there is: A. as much consumer surplus as in the case of perfect competition. B. as much consumer surplus as in the case of monopolistic competition. C. zero consumer surplus. D. as much consumer surplus as in the case of a standard monopoly.

#5 Which of the following statements is TRUE? A. Arbitrage makes it easier for firms to set different prices in different markets. B. Monopolists typically prefer not to segment markets. C. To maximize profits, monopolists will always set a higher price in markets with more inelastic demand curves. D. Even if demand curves are identical, it is still typically profit maximizing for monopolists to charge different prices in different markets.

#6Pfizer sells Atgam in New Zealand for $14 per pill and in Brazil for $8 per pill. This implies that the demand curve in New Zealand must be ________ than in Brazil. A. less inelastic B. closer to perfectly elastic C. more inelastic D. more elastic

#7 A monopolist is seeking to price discriminate by segregating the market. The demand in each market is given as follows: Market A: P = 132 - 3Q Market B: P = 198 - 4Q The monopolist faces a marginal cost of $26 and has no fixed costs. Given this information, what price should the monopolist charge in Market B? Round your answer to two decimal places. Do not include a $ sign.

#8 A monopolist is seeking to price discriminate by segregating the market. The demand in each market is given as follows: Market A: P = 153 - 2Q Market B: P = 151 - 4Q The monopolist faces a marginal cost of $25 and has no fixed costs. Given this information, what is the difference between the total quantity the price-discriminating monopolist will supply across both markets and the total quantity that would be supplied in a perfectly competitive market with the same marginal costs for firms at equilibrium? Round your answer to two decimal places. Do not include a $ sign. Your answer should be a positive number.

#9 A monopolist is seeking to price discriminate by segregating the market. The demand in each market is given as follows: Market A: P = 168 - 1Q Market B: P = 148 - 4Q The monopolist faces a marginal cost of $21 and has no fixed costs. Given this information, what are the monopolists total profits across both markets when they price discriminate? Round your answer to two decimal places. Do not include a $ sign.

Explanation / Answer

1. The correct answer will be "A". Teenage gamers would exploit arbitrage opportunities, buy games at a low price and sell it at a higher price to adult gamers.

Price discrimination could not be practiced with the goods which can be resold. There is a huge possibility of transference and the tow markets are not segmented.

2. The correct answer will be "D". The given situation is an example of price discrimination. The authority is charging two different prices to two different kinds of consumers. Different for local and a different price for the international customer.  

3. The correct answer is "D". This incidence will help in equalizing the price of books in two markets. Because the American students are buying books from India, this will increase the demand for books there and increase the price meanwhile prices in the US will fall because of low demand.   

4. The correct answer is "C". Zero consumer surplus. In a perfect price discriminating monopoly, all consumer surplus is transferred to Producer surplus.  

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