Q. An electricity producer charges lower rates to its high-volume customers and higher rates to its low-volume customers. The degree of price discrimination is best described as:
second.
first.
third.
Solution
A is correct. Second-degree price discrimination involves using the quantity purchased as the basis for the pricing of a particular good.
B is incorrect because first-degree price discrimination (perfect price discrimination) involves charging each customer their reservation price.
C is incorrect because third-degree price discrimination involves segregating customers by demographic or other traits.
Q. If the reduction of a product’s price increases total revenue, demand is best described as:
inelastic.
unit elastic.
elastic.
Solution
C is correct. A product’s demand is elastic if demand increases by a greater percentage than the percentage price change when prices are reduced. For example, if a 1 percent price reduction increases the quantity sold by more than 1 percent, total revenue increases and demand is said to be elastic.
A is incorrect because if demand is inelastic, a price reduction would reduce total revenue.
B is incorrect because if demand is unit elastic, a price reduction leaves total revenue unchanged.
Q. Which of the following is most likely to cause a shift to the right in the aggregate demand curve?
Boom in the stock market
Increase in taxes
Decrease in real estate values
Solution
A is correct. A boom in the stock market increases the value of financial assets and household wealth. An increase in household wealth increases consumer spending and shifts the aggregate demand curve to the right.
B is incorrect because an increase in taxes decreases household wealth and shifts the aggregate demand to the left.
C is incorrect because a decrease in real estate values decrease household wealth and shifts the aggregate demand to the left.
Q. The elasticity of demand for a good is most likely greater when:
a lesser proportion of income is spent on the good.
the good is a necessity.
the adjustment to a price change takes a longer time.
Solution
C is correct. For most goods and services, the long-run demand is much more elastic than the short-run demand. For example, if gas prices rise, consumers cannot quickly change their mode of transportation but will likely do so in the longer run.
A is incorrect because the greater the proportion of income spent on a good, the more elastic the demand.
B is incorrect because necessities have inelastic demand.
Q. Which of the following statements with respect to Giffen and Veblen goods is least accurate?
Giffen goods are “inferior,” whereas Veblen goods are “high-status” goods.
The highly negative income effect overpowers the substitution effect for both types of goods.
Both types of goods demonstrate the possibility of a positively sloping demand curve.
Solution
B is correct. The overwhelming nature of the highly negative income effect over the substitution effect is applicable to Giffen goods only. Veblen goods are highly valued, high-priced “status” goods; consumers may tend to buy more of a Veblen good if its price rises.
A is incorrect because it is true that Giffen goods are “inferior” whereas Veblen goods are “high-status” goods.
C is incorrect because it is true that both Giffen goods and Veblen goods demonstrate the possibility of a positively sloping demand curve.
就是本国premium对应 lower -》外国的就higher
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