ECON 301 Test 4 2025 Questions and
Answers
If market demand is P = 100 - Q and the firm has a constant marginal cost of 20,
then with first-degree price discrimination, the firm's producer surplus will be: - --
CORRECT ANSWER--3200
A firm faces a market demand curve P = 50 - 5Q. It has a constant marginal cost
of $10. Relative to standard monopoly pricing, how would a block pricing strategy
where the first four units can be purchased for a price of $30 each but two more
units can be purchased for an additional $20 each change consumer surplus and
producer surplus? - --CORRECT ANSWER--Consumer surplus would increase by
$10, and producer surplus would increase by $20.
Relative to perfect competition, first-degree price discrimination results in: - --
CORRECT ANSWER--lower consumer surplus, higher producer surplus, and
equal total surplus.
A golf course has frequent players whose demand is Qf = 260 - 0.4P and
infrequent players whose demand is Qi = 10 - 0.1P. Combined market demand is
Q = 34 - 0.4P. The marginal cost and average total cost of providing a round of
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, golf are $20. How much higher will profit be if the golf course uses third-degree
price discrimination instead of charging all golfers the same price? - --CORRECT
ANSWER--$7.50
Which of the following results in the highest amount of total surplus? - --
CORRECT ANSWER--first degree price discrimination
Which of the following conditions do not have to be met in order for indirect
price discrimination by versioning to work? - --CORRECT ANSWER--The
marginal costs of producing each version of the product must be the same.
The key difference between markets where third-degree price discrimination is
possible and markets where second-degree price discrimination is possible is
whether: - --CORRECT ANSWER--firms can identify customers' demand before
the customers make a purchase.
An airline sells seats on its flights to business travelers whose demand is QB = 300
- P and to vacation travelers whose demand is QV = 150 - 0.5P. Combined market
demand is Q = 450 - 1.5P. The marginal cost and average total cost of providing a
seat on a flight are $200. How much higher will profit be if the airline uses third-
degree price discrimination instead of charging all travelers the same price? - --
CORRECT ANSWER--$0
Which of the following results in the highest amount of producer surplus? - --
CORRECT ANSWER--two part tariff
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 2
Answers
If market demand is P = 100 - Q and the firm has a constant marginal cost of 20,
then with first-degree price discrimination, the firm's producer surplus will be: - --
CORRECT ANSWER--3200
A firm faces a market demand curve P = 50 - 5Q. It has a constant marginal cost
of $10. Relative to standard monopoly pricing, how would a block pricing strategy
where the first four units can be purchased for a price of $30 each but two more
units can be purchased for an additional $20 each change consumer surplus and
producer surplus? - --CORRECT ANSWER--Consumer surplus would increase by
$10, and producer surplus would increase by $20.
Relative to perfect competition, first-degree price discrimination results in: - --
CORRECT ANSWER--lower consumer surplus, higher producer surplus, and
equal total surplus.
A golf course has frequent players whose demand is Qf = 260 - 0.4P and
infrequent players whose demand is Qi = 10 - 0.1P. Combined market demand is
Q = 34 - 0.4P. The marginal cost and average total cost of providing a round of
....COPYRIGHT ©️ 2025 ALL RIGHTS RESERVED...TRUSTED & VERIFIED 1
, golf are $20. How much higher will profit be if the golf course uses third-degree
price discrimination instead of charging all golfers the same price? - --CORRECT
ANSWER--$7.50
Which of the following results in the highest amount of total surplus? - --
CORRECT ANSWER--first degree price discrimination
Which of the following conditions do not have to be met in order for indirect
price discrimination by versioning to work? - --CORRECT ANSWER--The
marginal costs of producing each version of the product must be the same.
The key difference between markets where third-degree price discrimination is
possible and markets where second-degree price discrimination is possible is
whether: - --CORRECT ANSWER--firms can identify customers' demand before
the customers make a purchase.
An airline sells seats on its flights to business travelers whose demand is QB = 300
- P and to vacation travelers whose demand is QV = 150 - 0.5P. Combined market
demand is Q = 450 - 1.5P. The marginal cost and average total cost of providing a
seat on a flight are $200. How much higher will profit be if the airline uses third-
degree price discrimination instead of charging all travelers the same price? - --
CORRECT ANSWER--$0
Which of the following results in the highest amount of producer surplus? - --
CORRECT ANSWER--two part tariff
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