If We Observe a Firm Engaging in Price Discrimination, It

question 20

Multiple Choice

If we observe a firm engaging in price discrimination, it must be TRUE that

• A) the firm is enjoying higher total profits than it would have earned if it charged a single price for the product.
• B) the firm can identify the preferences of every customer it serves.
• C) the firm earns higher profits per unit than it would have earned if it charged a single price for the product.
• D) All of the above are correct.

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Definitions:

Break-Even Point

The point at which total revenues equal total costs, and the business makes neither profit nor loss.

Fixed Expenses

A repackaged definition of fixed costs emphasizing their nature as constant across different levels of output or sales.

Selling Price

The amount of money charged to the buyer for a product or service.

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenue, indicating the company's bottom line.