(Figure: Type a and Type B I) Suppose a Firm

question 156

Multiple Choice

(Figure: Type A and Type B I) Suppose a firm plans to use indirect price discrimination through quantity discounts. The firm cannot identify which customers are Type A or Type B before the purchase, so the firm would like to offer a regular-price plan and a quantity-discount plan to suit the customers' personal price sensitivity.
The minimum number of units customers should have to buy to get the discount is ____.

• A) 3
• B) 4
• C) 5
• D) 6

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Definitions:

Tax

A mandatory monetary fee or tax levied by a government on individuals or organizations to finance public spending.

Price Elasticity

An indicator of the sensitivity of the demand for a product to fluctuations in its price.

Gasoline Demand

The total quantity of gasoline that consumers are willing and able to purchase at a given price over a certain period.

Price Elasticity

A measure of how the quantity demanded or supplied of a good changes in response to a change in its price.