Erin and Deidre, Two Residents of Ithaca, New York, Are

question 69

Multiple Choice

Erin and Deidre, two residents of Ithaca, New York, are planning a trip to Boston.Erin, the sales manager for a large retailer, has to attend a business meeting.Deidre, a college student on vacation, is planning a leisurely trip to visit friends and relatives.Which of the following statements is true?

• A)An airline that price discriminates will most likely charge Erin a higher price.
• B)An airline that price discriminates will most likely charge Deidre a higher price.
• C)Since there is no difference in the cost of producing air travel, airlines will not charge different prices to Erin and Deidre.
• D)An airline cannot price discriminate because buyers can resell their tickets through the Internet.

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Definitions:

Direct Material Price Variance

Direct material price variance measures the difference between the actual cost of direct materials and the expected (or standard) cost, indicating how well a company manages its material costs.

Actual Price

The real or transacted price of a good, service, or asset, usually the amount of money exchanged in the sale.

Standard Price

A predetermined price established by a company for a product or service, used for budgeting and cost control purposes.

Unfavourable Variances

Unfavourable Variances are cost or revenue variances that indicate a business is performing worse than its budgeted or planned figures.