Home › CA Foundation › Business Economics › Price-Output Determination under Different Market Forms › Charging a lower per-unit price for a larger fam…
Charging a lower per-unit price for a larger family pack of soap than for a small pack is an example of:
ASecond degree price discrimination
BFirst degree price discrimination
CThird degree price discrimination
DPerfectly competitive pricing
Answer & Solution
Correct answer: A. Second degree price discrimination
1. Second degree discrimination charges different prices for different quantities purchased.
2. Larger quantities are offered at a lower unit price.
3. A family pack costing less per kg than a small pack fits this pattern exactly.
4. So this is second degree price discrimination, capturing only part of consumer surplus.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit III "Price-Output Determination under Different Market Forms", p.16_
Related questions
A firm is currently at an output where MR > MC. To maximise profit, the firm should:When a dominant low-cost firm sets the price and the smaller fringe firms simply accept anA market structure in which there is a single buyer of a product or factor service is knowA group of firms that explicitly agree to coordinate price and output to act jointly like Under the kinked demand curve model, the segment of the demand curve above the prevailing The kinked demand curve hypothesis, proposed by Paul Sweezy, is mainly used to explain:The single most important feature that distinguishes oligopoly from other market forms is:Under monopolistic competition, firms compete largely through non-price methods. The main