Two Conditions Are Necessary for Profitable Price Discrimination

question 129

Multiple Choice

Two conditions are necessary for profitable price discrimination.These are

• A) the firm must sell a standardized product; and the firm must be able to keep its national markets separate.
• B) the firm must be able to keep its national markets separate; and the existence of different price elasticities of demand in different countries must exist.
• C) the firm must rely upon substantial economies of scale; and the firm cannot be a member of a major trade block.
• D) the firm must sell highly differentiated products; and the existence of different prices elasticities of demand in different countries must exist.
• E) there must be no tariff differences between the countries and there must be a fragmented retail system.

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Definitions:

Intra-Entity Transfers

Refers to the transfer of goods, services, or resources between units within the same entity.

Goodwill

The intangible asset that represents the excess value of a company beyond its physical assets and liabilities, often arising from acquisitions.

Tax-Free Transaction

A financial transaction that does not result in a tax liability for any of the parties involved.

Fair Value

The selling price of an asset or the price to take on a liability in a coordinated market transaction at the time of measurement.