A Firm Cannot Price Discriminate If

question 9

Multiple Choice

A firm cannot price discriminate if

• A) its has declining marginal revenue.
• B) it operates in a competitive market.
• C) buyers only reveal the price they are willing to pay for the product.
• D) it has a constant marginal cost.

---

Definitions:

Today's Dollars

Today's Dollars refers to the value of money in terms of the present day's purchasing power, often used to account for inflation in financial calculations.

Profitability Index

A calculation that measures the ratio between the present value of future cash flows to the initial investment, used to assess the profitability of an investment.

IRR

The discount rate at which the net present value of all the cash flows from a project or investment equals zero.

Mutually Exclusive Investment

This refers to a situation in corporate finance where choosing one investment option prevents the selection of another due to constraints such as capital or projects serving the same purpose.