ECO 550 Final Exam (36 Questions with Correct Answers)
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Prestige pricing<br />
Price lining<br />
Skimming<br />
Incremental pricing<br />
Third-degree price discrimination exists whenever:<br />
Answer<br />
the seller knows exactly how much each potential customer is willing to pay and will charge<br />
accordingly.<br />
different prices are charged by blocks of services.<br />
the seller can separate markets by geography, income, age, etc., and charge different prices to<br />
these different groups.<br />
the seller will bargain <strong>with</strong> buyers in each of the markets to obtain the best possible price.<br />
Which of the statements about price discrimination is (are) false?<br />
Answer<br />
It must be possible to segment the market.<br />
It must be difficult to transfer the seller’s product from one market segment to another.<br />
Public utilities practice first-degree price discrimination.<br />
There must be differences in the elasticity of demand from one segment to another.<br />
The following are possible examples of price discrimination, EXCEPT:<br />
Answer<br />
prices in export markets are lower than for identical products in the domestic market.<br />
senior citizens pay lower fares on public transportation than younger people at the same time.<br />
a product sells at a higher price at location A than at location B, because transportation costs are<br />
higher from the factory to A.
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