Identify the Correct Statement About Price Discrimination

question 7

Multiple Choice

Identify the correct statement about price discrimination.

• A)Price discrimination is costless.
• B)Price discrimination is effective only if demand for the product is perfectly inelastic.
• C)Price discrimination is effective when producers face a downward-sloping demand curve.
• D)Price discrimination increases consumer surplus.

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Definitions:

Floating Rate

An interest rate that fluctuates over time with the market or an index.

Fixed Rate

An interest rate that remains unchanged throughout the entire term of the loan, mortgage, or bond.

Derivative Security

A financial security whose value is dependent upon or derived from one or more underlying assets.

Hedging

Reducing a firm’s exposure to price or rate fluctuations. Also immunization.