Assume That a Profit-Maximizing Firm Practices Price Discrimination in Two

question 16

Multiple Choice

Assume that a profit-maximizing firm practices price discrimination in two different market segments.If the marginal cost of producing the good is the same,the price:

• A)will be lower in the segment with lower cross price elasticity of demand.
• B)will be higher in the segment with higher income elasticity of demand.
• C)will be lower in the segment with lower fixed costs.
• D)will be higher in the segment with lower price elasticity of demand.
• E)will be higher in the segment with higher marginal revenue.

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Definitions:

Prompt Payment Discount

A discount offered to customers for paying their invoices before a specified due date, used as an incentive for early payment.

Annual Rate

A periodic interest rate calculated over a year, often representing the cost of borrowing money or the earnings from an investment.

Vendor's Invoice

A document from a seller to a buyer that describes the products or services sold, their quantities, and the prices agreed upon.

Net Working Capital

The variance between an organization's immediate assets and its short-term liabilities, showcasing its financial stability in the short run.