The hurdle method of price discrimination is an attempt to
A) separate consumers on the basis of their reservation prices.
B) inconvenience all consumers.
C) separate consumers on the basis of their incomes.
D) encourage consumers with high reservation prices to make a purchase they were not going to make.
E) encourage consumers with low reservation prices to refrain from buying.

Question

Quizplus · Accepted Answer

The hurdle method of price discrimination is designed to separate consumers on the basis of their reservation prices, which are the maximum prices they are willing to pay for a product or service. By setting a high price or imposing a requirement that must be met in order to make a purchase (the hurdle), those with lower reservation prices will be discouraged or unable to buy, while those with higher reservation prices will still be willing to pay the higher price or overcome the hurdle. This allows the seller to capture more of the consumers' surplus, as they are charging a higher price to those who value the product more.

The Hurdle Method of Price Discrimination Is an Attempt to