With block pricing the monopolist:
A)charges each consumer her reservation price.
B)charges each consumer the same price.
C)sells the first number of units at one price and additional units at a second price.
D)requires the consumer to purchase minimum quantities.

Question

Quizplus · Accepted Answer

With block pricing, the monopolist sells the first number of units at one price and additional units at a second price. This allows them to capture more consumer surplus from those who are willing to pay a higher price for additional units while still generating some revenue from those who are only willing to pay the lower initial price. With block pricing, the monopolist sets a lower price for the first set of units sold and a higher price for any additional units. This allows the monopolist to capture more consumer surplus from those who are willing to pay a higher price for additional units, while still attracting those who are only willing to pay the lower price for the initial units. Therefore, the monopolist benefits by charging different prices for different quantities of units sold.

With Block Pricing the Monopolist