The Strategy Underlying Price Discrimination Is to

question 229

Multiple Choice

The strategy underlying price discrimination is to

• A) charge higher prices to customers who have better access to substitutes.
• B) charge everyone the same price but limit the quantity they are allowed to buy.
• C) increase total revenue by charging higher prices to those with the most inelastic demand for the product and lower prices to those with the most elastic demand.
• D) reduce per-unit cost to the firm by charging higher prices to those with the most inelastic demand and lower prices to those with the most elastic demand.

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Definitions:

Personal Income

The total amount of income received by an individual or household from all sources, including but not limited to wages, salaries, dividends, and rental income, before any taxes or deductions.

Corporate Income

is the total profit that a company generates from its operations, after expenses and taxes are subtracted from total revenue.

Transfer Payments

Payments made by the government to individuals without any expectation of a good or service being provided in return, such as pensions or welfare benefits.

Domestic Output

The overall valuation of all goods and services made within a country's territorial limits within a designated timeframe.