A monopolist sets its price at $100 and offers a 10% rebate.For this to be a perfect hurdle,it must be the case that
A) everyone takes advantage of the rebate.
B) those with a reservation price of $90 do not make a purchase.
C) no one takes advantage of the rebate.
D) those with a reservation price of $100 make the purchase and claim the rebate.
E) those with a reservation price of $100 or more make the purchase and ignore the rebate while those with a reservation price between $99 and $90 make the purchase and use the rebate.

Question

Quizplus · Accepted Answer

A perfect hurdle allows the monopolist to segment the market by reservation price, ensuring that consumers with higher reservation prices pay more while those with lower reservation prices pay less after the rebate.

A Monopolist Sets Its Price at $100 and Offers a 10