Advance Competative Strategy

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Is selling a bundle for 40 USD and the individual albums for 30 USD better than selling both albums for 20 USD?

[pic 51]The firm makes higher profits by selling the bundle at 40 USD and the individual albums at 30 USD.

[pic 52]The firms make less money by selling the bundle.

10. Which of the following statements about versioning is not true?

[pic 53]The different versions of a product usually differ in their quality and functionality.

[pic 54]There is no clear boundary between versioning and product differentiation.

[pic 55]Versioning is always cheaper than non-linear pricing for the firm.

[pic 56]Firms offer several versions of a product at different price levels.

[pic 57]Flight tickets that charge different prices for different flight classes are an example for versioning.

11. Which of these cases are examples of third degree price discrimination?

[pic 58]Direct flights are more expensive than flights with several stops.

[pic 59]Unemployed individuals pay the same price as working individuals.

[pic 60]Smartphones are sold cheaper in poorer countries.

[pic 61]An electricity provider charges a lower price in the evening than during the day.

[pic 62]Students pay less to go to the museum than non-students.

[pic 63]A firm that only sells bicycles and helmets in bundles.

12. What is the reasoning behind intertemporal pricing?

[pic 64]Firms will increase their prices later on, so they can attract more valuable customers in the future.

[pic 65]Firms initially set a relatively low price so they can sell first to a broad mass of consumers with a randomly distributed willingness to pay.

[pic 66]Firms initially set a relatively high price, so they can first sell to consumers that have a high willingness to pay.

[pic 67]Firms will decrease the price of their product later on so they can also attract customers with a lower willingness to pay.

13. What is true about intertemporal pricing?

[pic 68]The idea behind intertemporal pricing is to charge different prices for different products at the same time.

[pic 69]For communication platforms like WhatsApp, it would be wise to first set a lower price and then increase it over time, to initially increase the number of users.

[pic 70]The idea behind intertemporal pricing is to charge the same prices for different products at different points in time.

[pic 71]When implementing a pricing scheme for heterogeneous consumers, firms should lower the price over time to skim off consumers’ willingness to pay efficiently.

[pic 72]Intertemporal pricing is typically a good strategy as consumers perceive later price reductions as fair.

[pic 73]Intertemporal pricing is problematic when it comes to durable goods.

[pic 74]Intertemporal pricing can be considered a special case of second degree price discrimination.

14. What are positive consequences of competition between firms?

[pic 75]Competition forces firms to innovate.

[pic 76]Efficient production is fostered by competition.

[pic 77]Competition can reduce risks for both firms and customers.

[pic 78]Cartels can be formed and maintained easily.

[pic 79]Competition forces firms to create more and more differentiated products.

15. Which of the following statements are true?

[pic 80]A ban on cartels means banning agreements between competitors or contracts between suppliers and customers that restrict competition.

[pic 81]Analyzing customers’ moves can help identify collusive behavior.

[pic 82]Separated territories never indicate illegal agreements on exclusive territories.

[pic 83]No concrete evidence is required for legally banning cartels or fining companies.

[pic 84]A ban on cartels means banning monopoly profits or contracts between suppliers and customers that restrict competition.

[pic 85]Concrete evidence is required for legally banning cartels or fining companies.

16.

Which of the following shapes best depicts a typical diffusion process of a network good?

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17. What are indirect network effects when considering the example of credit card payment?

[pic 94]The more consumers use a credit card, the more profitable it is for shops to allow credit card payment in their shops and the more shops offer credit card payment the more consumers will choose credit card payment.

[pic 95]The more often a consumer pays with the credit card, the cheaper the credit card gets for the other consumers.

[pic 96]Indirect network effects suggest that many credit card holders switch to other credit card companies because they don’t like the dominant position of their

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