Which of the Following Is True of Perfect Price Discrimination

question 156

Multiple Choice

Which of the following is true of perfect price discrimination?

• A)Profit is lower than it would be without discrimination.
• B)Revenue is higher than it would be without discrimination, but profit is lower.
• C)Average revenue and average cost are both higher than they would be without discrimination, so it is not certain whether profit will be higher.
• D)Consumer surplus is zero.
• E)Profit is zero.

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Definitions:

Unamortized Discount

The portion of the bond discount that has not yet been expensed in the income statement over the bond's life.

Gain or Loss

The financial result that occurs when the selling price of an asset differs from its purchase price or adjusted basis, could be positive (gain) or negative (loss).

Bonds

Fixed income investment products that represent loans made by an investor to a borrower, typically corporate or governmental, which pays interest over a set period until maturity.

Repurchasing

The act of a company buying back its own shares from shareholders, reducing the amount of stock available on the open market.