Three Necessary Conditions Must Be Met Before a Seller Can

question 9

Multiple Choice

Three necessary conditions must be met before a seller can practice third-degree price discrimination. The conditions are: buyers must be separated into groups or submarkets according to their elasticities of demand, the seller must possess some degree of monopoly power, and

• A) the seller must prevent transfer of sales between the groups or submarkets.
• B) the seller must have "market dominance".
• C) the buyer must have profit maximization as a goal.
• D) the buyer must have variable costs that have to be recovered.

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Definitions:

Conditional Order

Refers to an order in a legal or financial context that will only be executed if certain conditions are met.

Negotiable Instrument

A financial document, such as a check or promissory note, that contains a promise to pay a specific amount of money to the bearer or assignee, which can be transferred by endorsement or delivery.

Promissory Note

A financial instrument containing a written promise by one party to pay a certain sum of money to another party under specified conditions.

Revolving Line of Credit

A flexible loan arrangement which allows a borrower to use, repay, and re-borrow funds up to a certain credit limit.