The authors explain that the marginal cost of production does not have to be constant in order to maximize profits under intertemporal price discrimination. Which of the following is NOT an example of changing marginal costs under profit-maximizing intertemporal price discrimination?
A) Marginal cost increases sharply after the initial marketing stages when the product is sold to the broader market of consumers.
B) Marginal costs decline over time due to learning-by-doing.
C) Marginal costs decline over time because the producer sells less expensive versions of the product in later stages of marketing (e.g., hard-cover versus paper-cover books).
D) Marginal costs decline over time due to economies of scale.

Question

Quizplus · Accepted Answer

A) is not an example of changing marginal costs under profit-maximizing intertemporal price discrimination because it describes a scenario where marginal costs increase rather than decrease. Intertemporal price discrimination typically involves lowering prices over time as costs decrease, not increasing prices as costs increase.

The Authors Explain That the Marginal Cost of Production Does