You Are Thirsty and Crave a Cola So You Pop

question 75

Multiple Choice

You are thirsty and crave a cola so you pop into your local supermarket to make a purchase. On the shelves, you notice that you can buy a cold 600 ml bottle for $3.20; a 1.25 litre bottle for $2.99 and a 2 litre bottle for $3.90. You want to purchase the 600 ml bottle for its convenience, but you are aware that the 2 litre bottle represents the best value for money on a price per ml basis. You are witnessing an example of:

• A) product form pricing.
• B) customer- segment pricing.
• C) psychological pricing.
• D) location- pricing.
• E) time pricing.

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Definitions:

Deadweight Loss

The loss of economic efficiency that can occur when the free market equilibrium for a good or a service is not achieved.

Consumer Surplus

The contrast between the total price consumers aim and are capable of paying for a good or service and the price they actually pay.

Tax

Mandatory financial charges imposed by a government on individuals or entities to fund public expenditures.

Producer Surplus

The difference between the amount producers are willing to accept for a good or service and the actual amount they receive, due to higher market prices.