EBK MANAGERIAL ECONOMICS
EBK MANAGERIAL ECONOMICS
4th Edition
ISBN: 8220100546624
Author: FROEB
Publisher: YUZU
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Chapter 14, Problem 1MC
To determine

Optimal segmentation strategy.

Expert Solution & Answer
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Explanation of Solution

When the advanced version is available with the same price as the old version, selling only the old version is not the optimal segmentation strategy. Thus, option ‘b’ is correct.

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Discuss the preferred deterrent method employed by the Zambian government to combat tax evasion, monetary fines. As noted in the reading the potential penalty for corporate tax evasion is a fine of 52.5% of the amount evaded plus interest assessed at 5% annually along with a possibility of jail time. In general, monetary fines as a deterrent are preferred to blacklisting of company directors, revoking business operation licenses, or calling for prison sentences. Do you agree with this preference? Should companies that are guilty of tax evasion face something more severe than a monetary fine? Something less severe? Should the fine and interest amount be set at a different rate? If so at why? Provide support and rationale for your responses.
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