If a Firm Knew Every Consumer's Willingness to Pay and Could

question 105

Multiple Choice

If a firm knew every consumer's willingness to pay and could prevent arbitrage, it could charge every consumer a different price.This practice is known as

• A)first-degree exploitation, or perfect price discrimination.
• B)maximization of producer surplus, or perfect price discrimination.
• C)first-degree price discrimination, or perfect price discrimination.
• D)first-degree transfer of consumer surplus, or perfect price discrimination.

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Definitions:

Net Operating Income

Net Operating Income is the total profit of a company after operating expenses are subtracted from operating revenues, excluding non-operating costs.

Residual Income

Income that remains after all operating expenses and costs of capital have been deducted from net operating income.

Profit Centre

A segment of a business that is responsible for both generating revenue and controlling costs, thereby directly influencing its own profitability.

Residual Income

Earnings generated beyond the minimum rate of return expected by a company or its investors, often used as a performance measure.