The Study of Price Discrimination Is Both Interesting and Complex

question 34

Multiple Choice

The study of price discrimination is both interesting and complex because

• A) there is no single model that represents how it is practiced in each firm or industry.
• B) the single model that represents all price discrimination allows economists to delve more deeply into practical analysis.
• C) monopolies are often shrouded in mystery and this practice opens a window into their day-to-day operations.
• D) students of economics can relate to the examples,but aren't able to easily calculate how price discrimination is beneficial.
• E) the consumer or the producer has the potential to maximize surplus,leading to rigorously debated social concerns.

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Definitions:

Capital Lease

A lease agreement in which the lessee records the leased asset as an asset in its balance sheet, and the lease payment obligations as liabilities.

Incremental Borrowing Rate

The interest rate a lessee would have to pay to borrow on a collateralized basis over a similar term for an amount equal to the lease payments.

Implicit Interest Rate

The rate of interest implied in the lease payments or in other financial arrangements, not explicitly stated.

Residual Value

The estimated value of an asset at the end of its lease term or useful life.