4.1.5.7 Price discrimination Quiz: AQA Economics, Unit 1

The 20 questions

1. What is the defining characteristic of price discrimination?

   • Constant marginal cost
   • Different prices
   • Identical prices
   • Maximum output

2. Which condition is essential for a firm to practise price discrimination successfully?

   • Homogeneous products
   • Zero entry barriers
   • Prevention of resale
   • Perfectly elastic demand

3. Which real-world pricing strategy is an example of third-degree price discrimination?

   • Volume bulk discounts
   • Student cinema discounts
   • Uniform flat pricing
   • Personalised haggling

4. Peak and off-peak pricing for train travel is an example of price discrimination based on what factor?

   • Geographical location
   • Consumer income
   • Volume purchased
   • Time of use

5. Dumping goods in foreign markets at lower prices than domestically is a form of what?

   • Price discrimination
   • Limit pricing
   • Predatory purchasing
   • Perfect competition

6. A firm discriminates between Group A (PED = -2) and Group B (PED = -4). Which group pays the higher price?

   • Neither group
   • Group B
   • Both pay equal
   • Group A

7. Compared to a single-price monopoly, how does price discrimination typically affect total output?

   • Decreases output
   • Eliminates output entirely
   • Leaves output unchanged
   • Increases output

8. What does a firm capture from consumers when it successfully price discriminates?

   • Deadweight loss
   • Marginal cost
   • Producer surplus
   • Consumer surplus

9. What is a major disadvantage of price discrimination for inelastic consumer groups?

   • Greater choice
   • Lower quality
   • Higher prices
   • Reduced total supply

10. A firm charges a lower price abroad than domestically. What must be true about foreign demand?

    • Unit price elastic
    • Perfectly price inelastic
    • More price inelastic
    • More price elastic

11. Under first-degree price discrimination, how much consumer surplus does the monopolist capture?

    • Entire consumer surplus
    • Half consumer surplus
    • Marginal consumer surplus
    • Zero consumer surplus

12. A cinema charges lower ticket prices to students than adults. What type of pricing is this?

    • Second-degree discrimination
    • Predatory pricing
    • First-degree discrimination
    • Third-degree discrimination

13. Which pricing practice sets a high initial price and then lowers it over time to capture different willingness to pay?

    • Predatory pricing
    • Price skimming
    • Cost-plus pricing
    • Penetration pricing

14. Price discrimination raises profit provided extra revenue exceeds which specific cost?

    • Average fixed costs
    • Marginal production costs
    • Market separation costs
    • Sunk capital costs

15. Demand for group X is Q = 100 - 5P. If price is set at £10, what quantity is demanded?

    • 10 units
    • 90 units
    • 50 units
    • 40 units

16. Which pricing strategy is an example of second-degree price discrimination?

    • Student movie discounts
    • Peak train fares
    • Bulk purchase discounts
    • Individual price haggling

17. Setting prices below average variable cost to force rivals out of a market is called:

    • Limit pricing
    • Predatory pricing
    • Price discrimination
    • Cost-plus pricing

18. How does price discrimination help a firm with high fixed costs survive?

    • Decreases price elasticity
    • Increases total revenue
    • Lowers marginal costs
    • Reduces fixed costs

19. Why do firms charge different price-discriminating prices to students and adults?

    • Different production costs
    • Equal marginal revenues
    • Different demand elasticities
    • Different fixed costs

20. Which group of buyers loses consumer surplus under third-degree price discrimination?

    • Zero-income buyers
    • Elastic demand buyers
    • Inelastic demand buyers
    • All consumer groups

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