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A block pricing scheme charges $100 per tire if customer s buy one or two tires and $75 if custo.ers but three or four tires.
A block pricing scheme charges $100 per tire if customer s buy one or two tires and $75 if custo.ers but three or four tires.
The monthly dena d curve facing a typical store is
Q = 1000 - 4]P
Marginal cost of the tire is $40 per tire.
A. What are monthly profits for the typical store under the block pricing system? What is the consumer surplus enjoyed by custo.ers of th e typical store?
B) With a uniform pricing of of P = $90 per tire .How does the firm profit and consumer surplus under uniform pricing compare to the profit and conSumer surplus outcomes under block pricing?
