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Description	Quiz - Chapter 14
Instructions	Quiz – Chapter 14 Chapter 14 quiz covers the theories and concepts you have read in chapter 14. The quiz is open-book and must be completed on the first launch. This quiz is not timed however Blackboard may time-out after 2 hours 30 minutes so please watch the time carefully. The quiz can not be saved or restarted once it is launched. The quiz is due Day 7, Sunday 11:59 pm ET.
Multiple Attempts	Not allowed. This test can only be taken once.
Force Completion	Once started, this test must be completed in one sitting. Do not leave the test before clicking Save and Submit.

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Question 1

1. Firms should begin their pricing decisions by:

	a.	assessing total marginal cost of the product
	b.	identifying the value drivers in each customer segment
	c.	researching the market price of competitors
	d.	none of the above

5 points

Question 2

1. A manufacturer produces two types of computer software, Word processing (W) and Spreadsheet (S), which is offered to two different retail outlets (#1 and #2). The following table shows the maximum price each retail outlet is willing to pay for each individual software product. Product W Product S

Retail #1 $170 $105

Retail #2 $95 $135

What is the optimal pricing strategy that will maximize revenue for the manufacturer, given the maximum the retail outlets are willing to pay?

	a.	Bundle both products (W and S) and sell them at $230.
	b.	Price product W at $170 and Product S at $170.
	c.	Price product W at $170 and Product S at $135.
	d.	Bundle both products (W and S) and sell them at $275.
	e.	Price product W at $95 and Product S at $105.

15 points

Question 3

1. Barbers give a price discount to kids. According to price discrimination, if barbers use price discrimination, this implies demand for hair cuts by kids is more elastic.

	a.	False
	b.	True

5 points

Question 4

1. Electricity pricing that varies in its billing expense throughout the day is called

	a.	variable pricing
	b.	dynamic pricing
	c.	marginal pricing
	d.	marginal cost pricing
	e.	full cost pricing pricing

5 points

Question 5

1. Firms must prevent resale between segments using a variety of:

	a.	fences
	b.	bridges
	c.	tunnels
	d.	none of the above

5 points

Question 6

1. Firms that have a cover charge for their customers and charge for each item they purchase as well are exhibiting

	a.	universal access price discrimination
	b.	mixed bundling price discrimination.
	c.	declining block price discrimination.
	d.	uniform pricing
	e.	two-part price discrimination.

5 points

Question 7

1. For a monopolist that engages in price discrimination, when the price elasticity in market 1 is less (in absolute value) than in market 2, the optimal price in market 1 will exceed the optimal price in market 2.

	a.	true
	b.	false

5 points

Question 8

1. In ____ price discrimination, the monopolist charges each consumer the highest price that purchaser is willing to pay for each unit purchased (provided that this price exceeds the marginal cost of production).

	a.	first-degree
	b.	second-degree
	c.	third-degree
	d.	a and b
	e.	none of the above

5 points

Question 9

1. Second-degree price discrimination:

	a.	is also known as block rate setting
	b.	is imperfect in the eyes of a monopolist
	c.	is regularly practiced by public utilities
	d.	is effective only in the case of services or products which are sold in easily metered units
	e.	all of the above

5 points

Question 10

1. The segmenting of customers into several small groups such as household, institutional, commercial, and industrial users, and establishing a different rate schedule for each group is known as:

	a.	first-degree price discrimination
	b.	market penetration
	c.	third-degree price discrimination
	d.	second-degree price discrimination
	e.	none of the above

5 points

Question 11

1. Third-degree price discrimination exists whenever:

	a.	the seller can separate markets by geography, income, age, etc., and charge different prices to these different groups.
	b.	the seller knows exactly how much each potential customer is willing to pay and will charge accordingly.
	c.	the seller will bargain with buyers in each of the markets to obtain the best possible price.
	d.	different prices are charged by blocks of services.

5 points

Question 12

1. To maximize profits, a monopolist that engages in price discrimination must allocate output in such a way as to make identical the ____ in all markets.

	a.	ratio of price to marginal cost
	b.	ratio of marginal cost to marginal utility
	c.	ratio of price to elasticity
	d.	marginal revenue
	e.	none of the above

5 points

Question 13

1. ____ is a new product pricing strategy which results in a high initial product price. This price is reduced over time as demand at the higher price is satisfied.

	a.	Prestige pricing
	b.	Price lining
	c.	Skimming
	d.	Incremental pricing
	e.	None of the above

5 points

Question 14

1. ____ is the price at which an intermediate good or service is transferred from the selling to the buying division within the same firm.

	a.	Incremental price
	b.	Marginal price
	c.	Full-cost price
	d.	Transfer price
	e.	none of the above

5 points

Question 15

1. The optimal mark-up is: m = -1/ (E+1). When the mark-up on cookware equals 50%, then demand elasticity (E) for cookware is:

	a.	-1
	b.	-3
	c.	-1.5
	d.	-2

15 points

Question 16

1. Which of the following pricing policies best identifies when a product should be expanded, maintained, or discontinued?

	a.	target-pricing policy
	b.	market-share pricing policy
	c.	marginal-pricing policy
	d.	full-cost pricing policy
	e.	markup pricing policy

5 points

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