Using a Strategy of Price Discrimination, a Firm Can Increase

question 170

Multiple Choice

Using a strategy of price discrimination, a firm can increase its profits by offering lower prices to its customers who are willing to pay above the firm's:

• A) average costs.
• B) marginal costs.
• C) fixed costs.
• D) total costs.

---

Definitions:

Marginal Cost

The additional cost incurred by producing one more unit of a good or service, a critical concept for decision-making in production and pricing.

Marginal Revenue

The extra income a business earns by selling an additional unit of a product or service.

Profit-maximizing Firm

A business entity that aims to achieve the highest possible profit through its operations and decision-making, focusing on optimizing revenue and minimizing costs.

Marginal Revenue

The gain in income associated with the sale of one extra unit of a good or service.