A Manufacturer Might Try to Defend Itself Against Charges of Illegal

question 55

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 these could make price discrimination legal.

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Definitions:

Net Profit Margin

A financial ratio that shows the percentage of net income to revenue, indicating the efficiency at which a company converts sales into net profit.

Gross Margin

The difference between the sales revenue and the cost of goods sold, indicating the profitability of a company's core business activities.

Times Interest Earned

A financial ratio that measures a company's ability to meet its debt obligations based on its earnings before interest and taxes (EBIT).

Debt-To-Equity Ratio

A financial ratio that measures the degree to which a company is financing its operations through debt versus wholly owned funds.