The Car Parts Company (TCP) and UltraDrive Components, Inc

question 39

Multiple Choice

The Car Parts Company (TCP) and UltraDrive Components, Inc., sell motor vehicle parts to Vroom! Stores, Inc., and Willys Trucking Corporation. Price discrimination occurs if

• A) TCP charges Vroom! and Willys different prices for identical goods.
• B) UltraDrive agrees to charge Willys stable prices even if market prices change.
• C) Vroom! refuses to buy parts from TCP if its prices are higher than UltraDrive's.
• D) the sellers' prices are influenced by the race or gender of the buyers' owners.

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Definitions:

Perpetuity

An annuity in which the cash flows continue forever.

Preferred Stock

A class of share capital that provides shareholders with a fixed dividend payment prior to any dividends being paid to common stockholders and typically does not confer voting rights.

Cost Computation

The process of calculating the total cost involved in manufacturing a product or providing a service.

Dividend Growth Model

A valuation method used to estimate the price of a company's stock by assuming that dividends grow at a constant rate in perpetuity.