Vickie, owner of a day spa, would use the hurdle method to price discriminate because she
A)does not have a good way to identify the reservation prices of buyers.
B)knows there is no variation in reservation price across buyers.
C)does not feel there is a strong demand for the product and buyers need incentives.
D)knows that buyers have an inelastic demand for the product.

Question

Quizplus · Accepted Answer

The hurdle method of price discrimination is used when a seller cannot easily identify the reservation prices of different buyers. By setting a "hurdle" (such as a coupon, rebate, or time-sensitive discount), the seller encourages those with a lower reservation price to self-select by taking the extra steps to benefit from the lower price, without having to directly identify each buyer's reservation price.

Vickie, Owner of a Day Spa, Would Use the Hurdle