Bethlehem Steel Provides Steel for a Variety of Uses to Its

question 213

Multiple Choice

Bethlehem Steel provides steel for a variety of uses to its various customers. Customers have different needs for the steel and thus Bethlehem has to prepare the raw steel differently depending on how customers will use it in their production processes. The primary business segmentation variable in this example is

• A) geographic location.
• B) customer size.
• C) product use.
• D) customer importance.
• E) organization classification.

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Definitions:

Negative Externality

A cost that is suffered by a third party as a result of an economic transaction.

Pigovian Externality

A situation where a market activity imposes a positive or negative cost or benefit on a third-party that is not reflected in the market price.

Free-Rider Problem

A situation in a shared-resource system where individuals consume more than their fair share or pay less than their fair share of the cost.

Free-Rider Problem

A situation where individuals consume a public good without contributing to its cost, undermining the provision of that good.