Which of the Following Statements Is Not Correct Regarding a "Damaged

question 32

Multiple Choice

Which of the following statements is not correct regarding a "damaged goods strategy"?

• A)A damaged good strategy is an example of "versioning".
• B)A damaged good strategy can be an example of third-degree price discrimination.
• C)A damaged good strategy can be an example of "building fences".
• D)A damaged good strategy is generally less profitable than a uniform pricing strategy for a high quality product.

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Definitions:

Slutsky Equation

Formula for decomposing the effects of a price change into substitution and income effects.

Substitution Effects

The economic understanding that as prices rise or income decreases, consumers will replace more expensive items with less costly alternatives.

Income Effects

Changes in consumer's purchasing power and consumption patterns resulting from changes in income.

Marginal Rate of Substitution

The rate at which a consumer is willing to give up one good in exchange for another good while maintaining the same level of utility.