A Base Price May Be Lowered by a Discount

question 110

Essay

A base price may be lowered by a discount.Discounts take a variety of forms and have several different objectives.Name and define three types of discounts (do not include allowances or rebates).State the main objective of each type of discount you identify.

---

Definitions:

Diseconomies of Scale

A situation in which a company or business grows so large that the costs per unit increase.

Long-run ATC

Long-run Average Total Cost refers to the per-unit cost of production in the long term where all inputs are considered variable.

Rate of Return

The rise or fall in an investment's worth over a designated period, articulated as a percentage of the cost of the investment.

Natural Monopolies

Natural monopolies occur in industries where the costs of production are lowest when a single firm supplies all the output, such as utilities companies.