Suppose a monopolist offers a $20 mail-in rebate on an item with a list price of $100. In order for the rebate to be a perfect hurdle, it must be the case that:
A)buyers use the rebate if and only if they have a reservation price between $80 and $100.
B)all buyers with a reservation price greater than $80 use the rebate.
C)some buyers with a reservation price greater than $80 use the rebate.
D)buyers use the rebate if and only if their cost of filling out the rebate is less than $20.

Question

Quizplus · Accepted Answer

A perfect hurdle is one that segregates buyers precisely according to their reservation prices, imposing no cost on those who jump the hurdle.

Suppose a Monopolist Offers a $20 Mail-In Rebate on an Item