Which of the Following Statements Is TRUE

question 24

Multiple Choice

Which of the following statements is TRUE?

• A) Cable companies have a hard time knowing which customers have a high willingness to pay for specific channels and which consumers have a low willingness to pay, making bundling an effective pricing strategy.
• B) Cable companies have high marginal costs and low fixed costs of production, making bundling an ineffective pricing strategy.
• C) Cable companies have low marginal costs and high fixed costs of production, making bundling an ineffective pricing strategy.
• D) Cable companies easily know which customers have a high willingness to pay for specific channels and which consumers have a low willingness to pay, making bundling an ineffective pricing strategy.

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Definitions:

CCA Class

Specific categories under the Canadian Capital Cost Allowance that determines the depreciation rate for tax purposes on an asset.

Depreciation Tax Shield

The reduction in income tax obligation resulting from the deduction of depreciation expenses.

Tax Rate

The percentage at which an individual or corporation is taxed on their income or profits.

Straight-Line Depreciation

A method of calculating the depreciation of an asset, which evenly spreads the depreciable amount over the expected useful life of the asset.