Ap Micro 4.3 and 4.4 Terms and voc

What is price discrimination?

• A strategy to increase prices for loyal customers only.

• A method of charging the same price to all customers.

• A technique to offer discounts to all customers regardless of their purchase history.

• Price discrimination is a pricing strategy that involves charging different prices to different customers for the same product or service.

What are the three degrees of price discrimination?

• First-degree, Second-degree, Third-degree

• First-tier, Second-tier, Third-tier

• Basic, Advanced, Premium

• Zero-degree, One-degree, Two-degree

What condition is necessary for a firm to practice price discrimination?

• The ability to set a single price for all customers.

• The requirement for all customers to pay the same price.

• The necessity of having a uniform product without variations.

• The ability to segment the market and prevent resale.

How does first-degree price discrimination work?

• Setting prices based on average market demand rather than individual preferences.

• Offering discounts based on bulk purchases to all customers.

• First-degree price discrimination works by charging each consumer their maximum willingness to pay.

• Charging a flat rate to all consumers regardless of willingness to pay.

What is an example of second-degree price discrimination?

• A software company offering different pricing tiers for basic and premium versions.

• A restaurant offering a discount for large groups.

• An airline charging a flat fee for all passengers regardless of booking time.

• A clothing store having a seasonal sale on all items.

What is the impact of price discrimination on consumer surplus?

• Price discrimination has no effect on consumer surplus.

• Price discrimination can lead to a decrease in total consumer surplus.

• Price discrimination benefits all consumers equally.

• Price discrimination increases total consumer surplus.

How does producer surplus change under price discrimination?

• Producer surplus decreases under price discrimination.

• Producer surplus is eliminated under price discrimination.

• Producer surplus increases under price discrimination.

• Producer surplus remains unchanged under price discrimination.

What is deadweight loss and how is it affected by perfect price discrimination?

• Deadweight loss is unaffected by perfect price discrimination.

• Deadweight loss increases with perfect price discrimination.

• Deadweight loss is eliminated under perfect price discrimination.

• Deadweight loss is only relevant in monopolistic markets.

Why is the prevention of resale important for price discrimination?

• It allows consumers to buy at lower prices.

• It simplifies the pricing structure for consumers.

• It encourages competition among retailers.

• The prevention of resale is important for price discrimination because it protects the pricing strategy and prevents arbitrage.

Can you provide an example of third-degree price discrimination?

• A movie theater offering student and senior discounts.

• An airline charging the same fare for all passengers regardless of booking time.

• A restaurant offering a fixed menu price for all customers.

• A clothing store having a sale for all shoppers regardless of age.