Which Is the Best Example of Price Discrimination

question 11

Multiple Choice

Which is the best example of price discrimination?

• A)an airline company charging lower fares per pound for air freight than for passengers
• B)a telephone company charging lower rates to weekend users than weekday users
• C)a supermarket charging lower prices in its city stores than its out-of-the-way rural store
• D)a private doctor charging higher fees to patients receiving special services than patients receiving regular services

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Definitions:

Market Risk Premium

The additional return expected by investors for holding a risky market portfolio instead of risk-free securities.

Unique Risk

The risk specific to an individual asset, such as a stock, which can be mitigated through diversification.

Individual Security

A financial instrument (such as a stock or bond) representing an individual's ownership or creditor relationship with a corporation or governmental entity.

Market Risk Premium

The excess return that investors require for choosing a risky investment over a risk-free investment.