Use the Following to Answer Questions

question 80

Multiple Choice

Use the following to answer questions:
Figure: PPD
-(Figure: PPD) Refer to the figure. Which of the following statements best explains why a firm that perfectly price discriminates would sell additional units beyond c units of output?

• A) If the firm can perfectly price discriminate it can charge a price equal to the consumers' willingness to pay, which for all units beyond c is higher than the firm's marginal cost for those units.
• B) The firm will continue to increase profits as long as consumers' willingness to pay is greater than zero.
• C) A firm will not sell beyond c units of output. The marginal cost is greater than consumers' willingness to pay for these units.
• D) A firm will not sell beyond c units of output. The marginal cost is greater than the firm's marginal revenue for these units.

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Definitions:

Beta

A measure of a security's volatility in relation to the overall market, indicating its relative risk.

Risk-Free Return

The hypothetical earnings from an investment that carries no risk, typically illustrated by the return on government bonds, such as U.S. Treasury bills.

Jensen Measure

A performance metric that evaluates investment manager's returns excess compared to what could have been earned on a risk-adjusted basis.

Standard Deviation

A measure of the dispersion or variation in a set of values, indicating how much the values deviate from the mean.