When Multiple Firms' Price-Quality Positions Line Up Along the Same

question 8

Multiple Choice

When multiple firms' price-quality positions line up along the same indifference curve offering a consumer the same amount of consumer surplus,what term describes the situation?

• A)Price-quality parity
• B)Price matching
• C)Maximum willingness-to-pay
• D)Consumer surplus parity
• E)Consumer surplus

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Definitions:

Fixed Cost

Expenses that do not change in proportion to the level of goods or services produced by a business.

Contribution Format

An income statement format that separates fixed and variable costs and expenses, used to determine contribution margin.

Least-squares Method

A statistical technique used to determine the line of best fit by minimizing the sum of the squares of the differences between the observed values and the values predicted by the line.

Mixed Cost

Expenses that have both fixed and variable components, changing with levels of production but not in direct proportion.