Essay NSU MC7

Words: 1606
Pages: 7

Question 1
4 out of 4 points



A firm selling in two markets is practicing price discrimination




Selected Answer:
b.
when it is charging different consumers different prices and the price difference is not based upon cost differences.




Question 2
4 out of 4 points



To maximize profit a price discriminating firm should




Selected Answer:
d.
both a and c




Question 3
0 out of 4 points



If a firm is selling a product in two markets, A and B, and the marginal revenue in A
is $25 and the marginal revenue in B is $20, the firm should




Selected Answer:
a.
charge a higher price in A where MR is higher




Question 4
4 out of 4 points



The ability of a
…show more content…
Since Mega Media has already installed cable to all of the homes in its market area, the marginal cost of delivering the sports channel to subscribers is zero. The manager of Mega Media needs to know what price to charge for the sports channel service to maximize her profit. Before setting price, she hires an economist to estimate demand for the sports channel. The economist discovers that there are two types of subscribers who value premium sporting channels. First are the 3,000 die-hard sports fans who will pay as much as $150 a year for the new channel. Second, the premium sports channel will appeal to about 20,000 occasional sports viewers who will pay as much as $25 a year for a subscription to it.

Refer to Mega Media Cable Scenario: If Mega Media Cable TV is able to price discriminate, what would be the maximum amount of profit it could generate?




Selected Answer:
b.
$850,000




Question 16
0 out of 4 points



Mega Media Cable Scenario: Mega Media Cable TV is able to purchase an exclusive right to sell a premium sports channel in its market area. Let's assume that Mega Media pays $100,000 a year for the exclusive marketing rights to the sports channel. Since Mega Media has already installed cable to all of the homes in its market area, the marginal cost of delivering the sports channel to subscribers is zero. The manager of Mega Media needs to know what price to charge for the sports channel