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Customer under the above block pricing

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Reference no: EM131106044

A typical customer who buys from a firm has a demand given by P = 90 - 3 Q. The firm has a constant marginal cost MC = $18 and no fixed cost. It currently uses a uniform pricing strategy (i.e., it charges a single price for all the units it sells), but it is contemplating to switch to the following block pricing strategy: "Buy the first 7 units at a price of $75 per unit, and any subsequent unit at a price of $54 per unit." Compared with uniform pricing, profits per customer under the above block pricing are

  • $285 greater under block pricing
  • $147 greater under block pricing
  • $105 greater under block pricing
  • lower under block pricing than under uniform pricing

Reference no: EM131106044

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