A monopoly coffee shop is deciding on a menu of different cup sizes to sell to a population of consumers,some of whom are high demanders and some low demanders.How would the optimal menu differ depending on whether the consumers can be observably separated into the different types or not?
A) the menu is unaffected by type observability.
B) if types aren't observable, the large cup size should be increased to separate the high demander.
C) if types aren't observable, the small cup size should be increased to make it more attractive to low demanders.
D) if types aren't observable, the small cup size should be reduced to make it less attractive to high demanders.

Question

Quizplus · Accepted Answer

If types aren't observable, the small cup size should be reduced to make it less attractive to high demanders, encouraging them to self-select into purchasing the larger, more profitable cup size.

A Monopoly Coffee Shop Is Deciding on a Menu of Different