​For Direct Price Discrimination to Work

question 55

Multiple Choice

​For direct price discrimination to work

• A)​The firm need not be able to identify the members of the low-value group
• B)The firm be able to charge the low-value customers a lower price than the higher-value customers
• C)The firm need not worry about any arbitrage since all its customers are charged the same price
• D)​It needs to be too complicated for the customers to understand

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Definitions:

Duty of Loyalty

is an ethical and legal obligation requiring individuals, often corporate directors or employees, to act in the best interest of their company or employer, avoiding conflicts of interest.

Duty of Care

A legal obligation imposed on individuals or entities requiring adherence to a standard of reasonable care to prevent harm to others.

Illegal Dividends

Dividends distributed by a company despite it not having sufficient profits or legally available capital, violating corporate law or its own articles of incorporation.

Shareholder's Derivative Suit

A legal action brought by shareholders on behalf of a corporation to enforce or defend its rights when the corporation's management fails to do so.