How Does Coupon Clipping Allow for Price Discrimination

question 164

Multiple Choice

How does coupon clipping allow for price discrimination?

• A) Coupon mailers are sent out only to economically disadvantaged households.
• B) Businesses are able to reward those customers who truly want their product by offering them a better deal than the casual consumer.
• C) Because coupon users are less price-sensitive,they require large differences in price to be apparent before they will be convinced to make a purchase.
• D) One price is charged to people who put forth the effort to use the coupon,while another price is charged to consumers for whom the marginal cost of finding and using the coupon is greater than the marginal benefit of a lowered price.
• E) It allows for price discrimination only if the consumer engages in extreme couponing,where the risks outweigh the rewards.

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Definitions:

Economic Profits

The surplus or profit earned by a firm or individual after accounting for both explicit and implicit costs.

Purely Competitive Industry

An industry characterized by many small firms producing identical products where no single firm can influence the market price.

Consumer Demand

The desire and willingness of consumers to purchase goods and services at given prices.

Increasing-Cost Industry

An industry in which production costs increase as output expands, often due to limited resources or rising input costs.