An Efficient Customer Sorting Rule Is One in Which

question 20

Multiple Choice

An efficient customer sorting rule is one in which

• A) customers with high willingness to pay secure the discounted goods
• B) customers are rationed randomly between the discounted and full price goods
• C) no customer purchase below her willingness to pay
• D) customers with the lowest willingness to pay secure the discount goods
• E) brand loyalty allows the incumbent to retain its regular customers

---

Definitions:

Option Price

The price that the option buyer pays to the option seller (writer) for the rights conveyed by the option contract.

Warrants

Securities that grant the holder the right to purchase the company's stock at a predetermined price before a specified date.

Implicit Call Option

A feature embedded in certain financial instruments or contracts that gives the issuer the right, but not the obligation, to take some action under specified conditions.

Loan Guarantees

Agreements in which a third party (the guarantor) agrees to repay the debt or perform an obligation if the debtor defaults.