Each of These Is an Example of Third-Degree Price Discrimination

question 193

Multiple Choice

Each of these is an example of third-degree price discrimination EXCEPT

• A) Bed Bath & Beyond offering a coupon for 20% off any one item.
• B) Szechwan Gardens offering an early-bird dinner menu.
• C) Sperry Shoe Outlet offering a 50% discount off of the second pair of shoes.
• D) Hilton Hotels offering a 10% senior (age 55 and over) discount.

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Definitions:

Fixed Costs

These are business expenses that remain constant regardless of the level of goods or services produced, such as rent, salaries, and insurance premiums.

Average Variable Cost

The total variable costs divided by the quantity of output produced, representing the variable cost per unit.

Marginal Cost

The additional cost incurred by producing one more unit of a good or service.

Fixed Costs

Costs that do not vary with the level of output or production in the short term, such as rent or salaries.