Which of the Following Conditions Must Be TRUE for Perfect

question 29

Multiple Choice

Which of the following conditions must be TRUE for perfect price discrimination?
I. The seller must have very good information about the buyer's willingness to pay.
II. Marginal revenue must equal demand.
III. The marginal cost of production must be constant.

• A) I only
• B) I and II only
• C) I and III only
• D) I, II, and III

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Definitions:

Idle Capacity

The unused portion of a company's production or service potential, often resulting in inefficiencies and increased costs.

Activity-Based Costing

A costing method that assigns costs to products or services based on the activities they require, aiming to provide more accurate product cost information.

Machine-Hours

A unit of measure representing the operating time of a machine, used in allocating costs to products based on machine usage.

First Stage Allocations

In managerial accounting, it refers to the process of allocating overhead costs initially to various departments or cost pools.