Coupons represent a form of price discrimination because they offer a low-cost way for firms to
A) identify customers with apparently more elastic demand and offer them a lower price.
B) retain loyal customers who are not price sensitive.
C) offer discounts to consumers who buy larger quantities.
D) perfectly price discriminate.

Question

Quizplus · Accepted Answer

Coupons help firms to identify customers who are more sensitive to prices by offering them a lower price. This is a way of price discrimination because different groups of customers are being charged different prices based on their willingness to pay. Coupons allow firms to adjust prices to the level that different customers are willing to pay, which ultimately maximizes revenue.

Coupons Represent a Form of Price Discrimination Because They Offer