Reference: Ref 10-7 (Figure 10.6) Little Pinehurst Miniature Golf has two types of customers: infrequent players and frequent players. Using a strategy of second-degree price discrimination, Little Pinehurst offers customers the choice of paying $15 per round of miniature golf or $12 per round for a package of 16 rounds. Which of the following statements is TRUE?
The pricing scheme is incentive-compatible for both groups of players. (
Suppose a firm has two types of customers but cannot tell which type of buyer a customer is before a purchase is made. One group of customers has an inverse demand of P= 100 –10Q, while another group of customers has an inverse demand curve of P= 110 22.5Q. If the firm wanted to use a quantity discount pricing scheme, what prices should it set? Assume that the marginal cost of production is constant at $20. The firm could charge $65 per unit for any quantity purchased or $60 per unit if buying 4 or more units. (–