(Figure: Groups a and B I) Suppose a Firm Has

question 42

Multiple Choice

(Figure: Groups A and B I) Suppose a firm has two types of customers but cannot tell which type of buyer the customer is before a purchase is made. If the firm wanted to use quantity discounting, it should charge _____ per unit for any quantity purchased or _____.

• A) $12; $4 per unit for 4 or more units
• B) $12; $7 for 3 or more units, but the pricing scheme would not be incentive-compatible for Type B customers
• C) $7; $4 for 2 or more units, but the pricing scheme would not be incentive-compatible for Type A customers
• D) $8.50; $4 for 3 or more units

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Definitions:

New York Stock Exchange

One of the largest stock exchanges in the world, located in New York City, serving as a marketplace for buying and selling stocks and securities.

NASDAQ Stock Market

An American stock exchange known for its technology-heavy stock portfolio, being the second-largest in the world by market capitalization.

Electronic Communications Networks

are digital platforms that facilitate the trading of financial products outside traditional stock exchanges, connecting buyers and sellers directly.