A Perfectly Competitive Firm Cannot Practice Price Discrimination Because

question 248

Multiple Choice

A perfectly competitive firm cannot practice price discrimination because

• A)a firm that breaks even in the long run cannot afford to engage in yield management.
• B)it does not advertise; this prevents the firm from marketing its product to different segments of the market.
• C)each consumer in a perfectly competitive market has the same willingness to pay.
• D)the firm can only charge the market price.

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Definitions:

Nominal Rate

The interest rate unadjusted for inflation; the face value rate expressed as a percentage.

Real Rate

The interest rate that has been adjusted to remove the effects of inflation, showing the true cost of borrowing.

Economic Rent

A payment made for the use of a good, service, or resource above and beyond what is necessary to encourage its production or supply.

Nonreproducible Resources

Natural resources that cannot be replaced or regrown at a pace that matches their consumption.