A Firm That Can Price-Discriminate Should Adjust Prices So That

question 239

Multiple Choice

A firm that can price-discriminate should adjust prices so that customers with _____ demand pay _____ prices than/as do those with _____ demand.

• A)price-inelastic;lower;elastic
• B)price-inelastic;the same;elastic
• C)price-elastic;lower;inelastic
• D)price-elastic;higher;inelastic

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Definitions:

Inflation Rate

The growth rate of the overall cost level for goods and services, undermining the efficacy of monetary resources.

Spot Rate

The current price in the marketplace at which a given asset—such as a currency, commodity, or security—can be bought or sold for immediate delivery.

Forward Rate

The predetermined price for a transaction that will occur at a specific future date, used in the context of currency and interest rate markets.

Interest Rate Parity

A theory that suggests the difference in interest rates between two countries is equal to the differential between the forward exchange rate and the spot exchange rate.