Microsoft Has a Special Version of Its Windows Operating System

question 127

Multiple Choice

Microsoft has a special version of its Windows operating system that it sells at a low price in countries where cheap pirated software is widespread. The cost of producing another copy of this software is the same as the cost of producing another copy of the regular Windows product. Selling this "special edition" software at a low price in certain countries is very similar to what economists call:

• A) price discrimination.
• B) natural monopoly.
• C) a price taker.
• D) welfare loss.

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Definitions:

Favourable Variance

A financial term indicating that actual costs were lower than budgeted costs, or actual revenues were higher than expected.

Variances

The differences between planned financial outcomes and the actual results, used in budgeting and accounting to track performance and plan future activities.

Cost of Goods Sold

The total cost associated with producing goods that have been sold during a specific period, including materials and labor.

Favourable Variances

Financial indicators that actual revenues are higher or costs are lower than what was originally planned or budgeted.