Price Discrimination Is Used When a Seller Faces Different Demand

question 145

Multiple Choice

Price discrimination is used when a seller faces different demand curves in different markets because:

• A) no other pricing methods are feasible.
• B) the practice eliminated waste.
• C) profits are greater than selling at a single price.
• D) profits are less than when selling at monopoly prices.

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Definitions:

Expected Rate

The rate of return anticipated on an investment or asset based on historical data or specified models.

CAPM

Capital Asset Pricing Model, a model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

Risk Premium

An expected return in excess of that on risk-free securities. The premium provides compensation for the risk of an investment.

Market Portfolio

An investment portfolio that theoretically includes all assets in the market, with each asset weighted according to its market capitalization.