Which of the Following Statements Is Not Correct

question 21

Multiple Choice

Which of the following statements is not correct?

• A)First-degree and third-degree price discrimination work to increase a firm's profits by converting consumer surplus into revenue for the firm.
• B)First-degree and third-degree price discrimination work to increase a firm's profits by more accurately matching willingness to pay to the marginal costs of production.
• C)First-degree price discrimination works to increase a firm's profits by converting consumer surplus into revenue for the firm, while third-degree price discrimination increases a firm's profits by more accurately assessing the willingness to pay of different groups of consumers.
• D)Because it focuses on more accurately assessing the willingness to pay of different groups of consumers, third-degree price discrimination will increase a firm's profits more than will first-degree price discrimination.

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Definitions:

Parent Company

A company that holds a controlling interest in one or more subsidiaries, exerting control and influence over their operations.

Subsidiary Company

A company that is completely or partially owned and wholly controlled by another company, which is referred to as the parent company.

Cost Method

An accounting method for investments where the investment is recorded at the purchase cost, without recognizing subsequent changes in market value.

Semiannual Receipt

Payments or incomes that are received twice a year.