From an Economic Perspective, Price Discrimination Is Desirable Because

question 139

Multiple Choice

From an economic perspective, price discrimination is desirable because

• A) the increase in profits is more than offset by the loss in consumer surplus, resulting in a net increase in economic surplus.
• B) it enables firms to increase profits with no loss in economic surplus, and in turn, this could provide firms with incentives to engage in beneficial product innovation.
• C) the increase in profits results in higher corporate tax revenues received by the government, which could be used to subsidise consumption for low-income individuals.
• D) it redistributes wealth from wealthy consumers to highly innovative firms.

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Definitions:

Products and Services

The combination of physical items and intangible activities that satisfy consumer needs and wants.

Countertrades

Alternative financial arrangements in international trade where goods and services are exchanged directly for other goods and services without the use of cash.

International Companies

Firms that engage in business operations across national borders, often involving manufacturing, sales, or service in multiple countries.

Barter

An ancient form of trade where goods or services are exchanged directly for other goods or services without the use of money as a medium.