Which of the Following Is True

question 111

Multiple Choice

Which of the following is true?

• A) A price-discriminating seller will charge consumers with an elastic demand a lower price than consumers with an inelastic demand.
• B) A firm must face a horizontal demand curve for its product in order to engage in effective price discrimination in a market.
• C) Price discrimination always harms consumers and helps sellers in the short run but in the long run, consumers benefit at the expense of sellers.
• D) A seller must have a monopoly in order to gain from price discrimination.

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Definitions:

FIFO Method

A method of inventory valuation that assumes the first items placed in inventory are the first sold, hence, the cost of the oldest inventory is used to determine the cost of goods sold.

Process Costing

A costing method used where similar products are produced continuously, allocating production costs based on the process or department.

Conversion Cost

The total cost of transforming raw materials into finished goods, including labor and manufacturing overhead.

Conversion Costs

The combined costs of direct labor and manufacturing overhead incurred to convert raw materials into finished products.