How Could a Multi Level Marketing Scheme for the Sale

question 49

Multiple Choice

How could a multi level marketing scheme for the sale of cookware through house parties constitute a pyramid scheme?

• A) if the pricing of the product is unreasonably low
• B) if the participants are prohibited from engaging in door to door or Internet sales
• C) if participants must pay money for the right to receive compensation for recruiting new participants
• D) if the participant is prohibited from selling other products

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Definitions:

Marginal Revenue Curve

A graphical representation showing how marginal revenue varies as the quantity of goods sold changes.

Demand Curve

A graph that shows the relationship between the price of a good and the quantity of it that consumers are willing to purchase at each price point.

Minimum Efficient Scale

The smallest amount of production a company can achieve while still taking full advantage of economies of scale regarding cost per unit.

Natural Monopoly

A type of monopoly that exists due to the high fixed or start-up costs of operating a business in a specific industry, making it inefficient for new firms to enter.