A Price Discriminating Pure Monopolist Will Attempt to Charge Each

question 176

Multiple Choice

A price discriminating pure monopolist will attempt to charge each buyer (or group of buyers)

• A) different prices to compensate for differences in the characteristics of the product.
• B) the same price if per unit cost is constant for each unit of the product.
• C) that price that equals the buyer's marginal cost.
• D) the maximum price each would be willing to pay.

---

Definitions:

Fixed Overhead

Costs that do not change with the level of production activity, such as rent, salaries, and insurance.

Operating Income

Earnings from a company's core business operations, excluding expenses and revenues from non-operational activities like investment income.

Absorption Costing

A costing method that includes all manufacturing costs—direct materials, direct labor, and both variable and fixed manufacturing overhead—in the cost of a product.

Manufacturing Margin

The difference between the sales revenue of manufactured goods and the direct costs associated with producing them.