The More Perfectly a Monopoly Can Price Discriminate, the

question 48

Multiple Choice

The more perfectly a monopoly can price discriminate, the

• A) larger its output and the lower its profits.
• B) smaller its output and the lower its profits.
• C) smaller its output and the greater its profits.
• D) larger its output and the greater its profits.

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Definitions:

Variable Costing

A costing method that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product cost calculation, contrasting with absorption costing that also includes fixed costs.

Product Costs

Costs that are incurred to create a product that is intended for sale to customers. This includes direct materials, direct labor, and manufacturing overhead.

Direct Labor

Costs associated with employees who are directly involved in the production of goods or the provision of services, such as wages for factory workers.

Direct Materials

Direct materials are the raw materials that can be directly traced to the production of goods.