Asked by La Vida de una Guerrera on Jun 11, 2024
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The authors explain that the marginal cost of production does not have to be constant in order to maximize profits under intertemporal price discrimination. Which of the following is NOT an example of changing marginal costs under profit-maximizing intertemporal price discrimination?
A) Marginal cost increases sharply after the initial marketing stages when the product is sold to the broader market of consumers.
B) Marginal costs decline over time due to learning-by-doing.
C) Marginal costs decline over time because the producer sells less expensive versions of the product in later stages of marketing (e.g., hard-cover versus paper-cover books) .
D) Marginal costs decline over time due to economies of scale.
Intertemporal Price Discrimination
A pricing strategy where a seller changes prices over time for the same product or service to maximize profits by taking advantage of differences in consumers' willingness to pay at different times.
Marginal Cost
The growth in the overall expense incurred from producing an additional unit.
Economies of Scale
The cost advantages that enterprises obtain due to their scale of operation, resulting in decreased costs per unit.
- Become aware of the contrasts between intertemporal price discrimination and peak-load pricing.
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Learning Objectives
- Become aware of the contrasts between intertemporal price discrimination and peak-load pricing.
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