If Students in the United States Go Online and Import

question 84

Multiple Choice

If students in the United States go online and import the much cheaper Indian version of your textbook instead of buying the American edition, how might this arbitrage nevertheless help the publisher of your textbook?

• A) It makes the prices in India and the United States more equal.
• B) It saves money on the color ink for the graphs.
• C) The students who go to the trouble to do this might resell the books for the higher American price and make a profit.
• D) The students who go to the trouble to do this might have had low willingness-to-pay in the first place, so the arbitrage enables another layer of price discrimination.

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Definitions:

Liability

A company's legal debts or obligations that arise during the course of business operations.

Asset

An economic resource owned or controlled by a person or entity, which is expected to provide future benefits.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities; represents the owners' share.

Current Assets

Current assets are all assets that a company expects to convert to cash or use within one year, such as inventory, accounts receivable, and cash.