(Figure: Groups A and B I) Suppose a firm has two types of customers but cannot tell which type of buyer the customer is before a purchase is made. If the firm wanted to use quantity discounting, it should charge _____ per unit for any quantity purchased or _____.
A) $12; $4 per unit for 4 or more units
B) $12; $7 for 3 or more units, but the pricing scheme would not be incentive-compatible for Type B customers
C) $7; $4 for 2 or more units, but the pricing scheme would not be incentive-compatible for Type A customers
D) $8.50; $4 for 3 or more units

Question

(Figure: Groups A and B I) Suppose a firm has two types of customers but cannot tell which type of buyer the customer is before a purchase is made. If the firm wanted to use quantity discounting, it should charge _____ per unit for any quantity purchased or _____.  
A) $12; $4 per unit for 4 or more units 
B) $12; $7 for 3 or more units, but the pricing scheme would not be incentive-compatible for Type B customers 
C) $7; $4 for 2 or more units, but the pricing scheme would not be incentive-compatible for Type A customers 
D) $8.50; $4 for 3 or more units

Quizplus · Accepted Answer

The Answer of (Figure: Groups A and B I) Suppose a firm has two types of customers but cannot tell which type of buyer the customer is before a purchase is made. If the firm wanted to use quantity discounting, it should charge _____ per unit for any quantity purchased or _____.  
A) $12; $4 per unit for 4 or more units 
B) $12; $7 for 3 or more units, but the pricing scheme would not be incentive-compatible for Type B customers 
C) $7; $4 for 2 or more units, but the pricing scheme would not be incentive-compatible for Type A customers 
D) $8.50; $4 for 3 or more units

(Figure: Groups a and B I) Suppose a Firm Has