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:

Utility Function

A mathematical model in economics that ranks alternatives based on their utility or satisfaction levels to a consumer.

Price of X

The monetary value or cost assigned to a good or service, labeled as "X" as a placeholder for any specific item.

Price of Y

The market cost or value assigned to a good or service denoted by 'Y', influenced by factors such as supply, demand, and competition.

Money

An officially issued legal tender generally accepted as a medium of exchange, a unit of account, and a store of value.