Suppose a water utility company charges a residential customer $1.50 per 1,000 gallons for the first 30,000 gallons of water used and $1.00 per 1,000 gallons for any amounts used in excess of 30,000 gallons of water. The water utility is practicing _____ price discrimination.
A) second-degree
B) first-degree
C) third-degree
D) perfect

Question

Quizplus · Accepted Answer

Second-degree price discrimination involves charging different prices per unit for different quantities of the same good or service. In this case, the water utility charges a higher rate for the first 30,000 gallons and a lower rate for any usage beyond that, which fits the definition of second-degree price discrimination.

Suppose a Water Utility Company Charges a Residential Customer $1