Economic Principles of Pricing Quiz

Test your knowledge on pricing strategies, elasticity, competition, and more with this microeconomics quiz.

Practice Learn Test

What is the main objective of pricing?

To maximize profits

To minimize costs

To control demand

To increase market share

Which of the following is NOT a factor affecting pricing decisions?

Costs

Competition

Consumer preferences

Product color

Which of the following is NOT a pricing objective?

Profit maximization

Revenue maximization

Market share minimization

Survival

Which of the following is a characteristic of monopolistic competition?

Many firms, differentiated products

One firm, identical products

Few firms, identical products

One firm, unique products

What is the law of demand?

As price increases, quantity demanded increases

As price decreases, quantity demanded decreases

As price increases, quantity demanded decreases

As price decreases, quantity demanded increases

Which of the following is a characteristic of oligopoly?

Many firms, differentiated products

One firm, identical products

Few firms, identical products

Few firms, interdependent behavior

What is price elasticity of demand?

A measure of how much demand changes with a change in price

A measure of how much price changes with a change in demand

A measure of how much supply changes with a change in price

A measure of how much quantity demanded changes with a change in supply

Which pricing strategy involves setting prices high initially and then lowering them over time?

Penetration pricing

Skimming pricing

Cost-plus pricing

Premium pricing

What is the difference between markup and margin?

Markup is the difference between selling price and cost, while margin is the ratio of profit to selling price

Markup is the ratio of profit to cost, while margin is the difference between selling price and cost

Markup is the ratio of profit to selling price, while margin is the difference between cost and selling price

Markup is the difference between cost and selling price, while margin is the ratio of profit to cost

#10

What is price discrimination?

Selling identical goods to different buyers at different prices

Selling goods at a constant price to all buyers

Selling goods at a higher price in one market compared to another market

Selling goods at a lower price in one market compared to another market

#11

What is price skimming?

Setting a low price for a new product initially and then gradually increasing it

Setting a high price for a new product initially and then gradually decreasing it

Setting a low price for a new product to gain market share quickly

Setting a high price for a new product to recover development costs quickly

#12

What is the concept of value-based pricing?

Setting prices based on the production costs of the product

Setting prices based on competitor pricing strategies

Setting prices based on the perceived value to the customer

Setting prices based on government regulations

#13

What is marginal cost?

The cost of producing one additional unit of a good or service

The total cost of production

The fixed cost of production

The variable cost of production

#14

What is the Nash equilibrium in game theory?

A situation in which each participant's strategy is optimal given the strategies of the other participants

A situation in which each participant's strategy is suboptimal given the strategies of the other participants

A situation in which each participant's strategy is unknown to the other participants

A situation in which each participant's strategy is randomly chosen

#15

What is the difference between perfect competition and monopolistic competition?

Perfect competition has many sellers with differentiated products, while monopolistic competition has only one seller

Perfect competition has many sellers with identical products, while monopolistic competition has many sellers with differentiated products

Perfect competition has only one seller, while monopolistic competition has many sellers with identical products

Perfect competition has many sellers with identical products, while monopolistic competition has only one seller

#16

What is predatory pricing?

Setting prices at a level intended to drive competitors out of the market

Setting prices below average cost to gain market share temporarily

Setting prices based on the value perceived by the customer

Setting prices in coordination with competitors to maintain market stability

#17

What is the profit-maximizing level of output for a firm?

The level of output where total revenue equals total cost

The level of output where marginal revenue equals marginal cost

The level of output where average revenue equals average cost

The level of output where price equals marginal cost