Trick or Treat Candy Company has lots of customers, some of whom have an inverse demand of P = 160 - 10Q, while others have an inverse demand curve of P = 120 - 5Q. Unfortunately, the owner, Hazel, does not know which customers are which until they buy. She knows that her marginal costs are constant at $25 and that she would like to use quantity discounting. Is this price scheme incentive-compatible? If more than 9.5 units are purchased, the price per unit will be $72.50; otherwise, the price per unit will be $92.50 per unit.

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The Answer of Trick or Treat Candy Company has lots of customers, some of whom have an inverse demand of P = 160 - 10Q, while others have an inverse demand curve of P = 120 - 5Q. Unfortunately, the owner, Hazel, does not know which customers are which until they buy. She knows that her marginal costs are constant at $25 and that she would like to use quantity discounting. Is this price scheme incentive-compatible? If more than 9.5 units are purchased, the price per unit will be $72.50; otherwise, the price per unit will be $92.50 per unit.

Trick or Treat Candy Company Has Lots of Customers, Some