A firm faces two types of consumers. Consumer A has an inverse demand of P = 120-10 Q and consumer B has an inverse demand of P = 60-2Q. The firm has a constant marginal cost of $20. Assume the firm does not know which type a given consumer is. She offers to sell the good at a price of 70$ per unit. However, if the customer buys 10 or more units, she will offer a quantity discount and charge only 40$ per unit (including the first 10). Which consumer will use the price discount? Question 7 options: Neither costumer will purchase from this firm at all. Customer A will choose the quantity discount and customer B will not choose the quantity discount. Both consumers will chose the quantity discount. Neither of the two consumers will opt for the quantity discount. Instead, both will purchase at the higher price of 70 and buy less than 10 units each. Customer B will choose the quantity discount and customer A will not choose the quantity discount.
A firm faces two types of consumers. Consumer A has an inverse
Assume the firm does not know which type a given consumer is. She offers to sell the good at a
Which consumer will use the price discount?
Question 7 options:
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Neither costumer will purchase from this firm at all. |
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Customer A will choose the quantity discount and customer B will not choose the quantity discount. |
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Both consumers will chose the quantity discount. |
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Neither of the two consumers will opt for the quantity discount. Instead, both will purchase at the higher price of 70 and buy less than 10 units each. |
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Customer B will choose the quantity discount and customer A will not choose the quantity discount. |
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