A Major Fruit Juice Manufacturer Failed in Its Attempt to Engage

question 72

Multiple Choice

A major fruit juice manufacturer failed in its attempt to engage in price discrimination between students and all other consumers. What is the most likely explanation for this failure?

• A) There was nothing to prevent the students from reselling the fruit juice to other consumers.
• B) The two groups of consumers have different demand elasticities for fruit juice.
• C) The cost of producing the product is relatively high.
• D) Market demand for fruit juice is inelastic.

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Definitions:

Variable Costing

An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs.

Operating Income

The profit realized from a business's core operations, excluding taxes and interest expenses.

Contribution Report

A document or statement that details the contributions made towards specific goals or projects, often used in fundraising or accounting contexts.

Variable Manufacturing Costs

These are costs that vary directly with the level of production output, including materials, labor, and certain overheads.