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_
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