The Athenian Theatre Sells Tickets for the Same Play at Different

question 151

Multiple Choice

The Athenian Theatre sells tickets for the same play at different prices: a lower price to those who opt for the seats at the back of the theatre and a higher price for those who purchase seats in the front, around the stage.Which of the following statements is true?

• A)This is an example of product differentiation but not price discrimination.
• B)The theatre practices first-degree price discrimination by setting prices based on willingness to pay.
• C)Since the cost of producing the play does not change with the seating configuration, this is evidence of price discrimination based on market segmentation.
• D)Charging two different prices is an effective way to avoid an excess demand for play tickets; the higher price lowers quantity demanded to some extent.

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Definitions:

Production Phase

The production phase is the period in a business cycle when raw materials are converted into finished products.

Revenue Recognition

The principle in accounting that outlines the exact situations in which revenue is to be acknowledged and accounted for.

Transitory Earnings

Earnings that are considered temporary or not expected to persist over time, often removed from projections or models that attempt to predict a company's future profitability.

Extraordinary Loss

Unusual and infrequent charges that are reported separately on a company's income statement, outside of its regular business operations.