Third-Degree Price Discrimination Involves

question 84

Multiple Choice

Third-degree price discrimination involves:

• A) charging each consumer the same two part tariff.
• B) charging lower prices the greater the quantity purchased.
• C) the use of increasing block rate pricing.
• D) charging different prices to different groups based upon differences in elasticity of demand.

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Definitions:

Scenario Analysis

A process of analyzing possible future events by considering alternative possible outcomes (scenarios).

Decision Tree Analysis

A graphical representation that uses branching methods to illustrate every possible outcome of a decision, helping to choose the best option.

Certainty Equivalent Approach

A financial analysis method that adjusts uncertain cash flows to reflect the risk-free cash flow an investor would accept in place of taking a risk.

Cost Of Capital

The earnings rate a firm must achieve on its investment endeavors to preserve its market value and draw in capital.