- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 9. The Firm and Market Structures
- Subject 6. Price Discrimination
CFA Practice Question
Price discrimination is more common for services, such as viewing a movie, than for goods, such as computers. How can we explain this?
B. Firms that sell computers do not have market power, but movie theaters do.
C. It is difficult to prevent resale of computers but easy to prevent resale of movies viewed.
D. Everyone has the same willingness to pay for a computer.
E. It is illegal to price discriminate in the computer market.
A. It is not profitable to offer discounts on computers.
B. Firms that sell computers do not have market power, but movie theaters do.
C. It is difficult to prevent resale of computers but easy to prevent resale of movies viewed.
D. Everyone has the same willingness to pay for a computer.
E. It is illegal to price discriminate in the computer market.
Correct Answer: C
For effective price discrimination, it must be possible to prevent resale. It is difficult to prevent the resale of goods such as computers.
User Contributed Comments 2
| User | Comment |
|---|---|
| nayagan | C is the best answer, but in reality, the better answer would be that a discount on computers would not separate the customers you are trying to attract. If it was a student discount on computers than that would be a different story. |
| Seancfa1 | Agreed |