A Manufacturer Might Try to Defend Itself Against Charges of Illegal

question 87

Multiple Choice

A manufacturer might try to defend itself against charges of illegal price discrimination by claiming that:

• A) the price discrimination occurred as a defensive measure to "meet competition in good faith."
• B) the price differentials did not actually injure competition.
• C) the price differentials were justified on the basis of cost differences in production and/or distribution.
• D) its products were not of "like grade and quality."
• E) Any of the above could make price discrimination legal.

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Definitions:

Divisional Segment Margin

The profit margin for a specific division or segment of a company, calculated by subtracting direct and allocated expenses from segment revenues.

Net Operating Income

A measure of a company's profitability from its regular business operations, excluding non-operating income and expenses.

Common Fixed Expense

A recurring cost that does not vary with the level of output or sales, such as rent or salaries.

Traceable Fixed Expenses

Fixed costs that can be directly linked to a specific product, department, or segment of a business, enabling more accurate profitability analysis.