Type 2
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This document discusses price discrimination, which is when a seller charges different prices for the same good or service to different consumers. It provides two examples: a publisher offering a weekly magazine at a higher per-issue price than an annual subscription, and a grocer selling individual biscuit packets at a higher unit price than two packets together. The discounts are intended to encourage buyers to purchase more by recognizing that additional units provide less utility, so sellers must lower the per-unit price to induce them to buy more.
Type 2
- 1. 2. Sale of different quantities of a good (or service) to same consumer at different prices. Examples: A publisher charges 3 euro per issue for a weekly magazine, but is willing to offer an annual subscription for 100 euro. A grocer sells a packet of biscuits at 2 euro, or two for 3 euro. The above price concessions or discounts are a recognition by the seller that the buyer is subject to the Law of Diminishing Marginal Utility. To persuade the buyer to purchase more of the good, the seller must make additional units available at a lower unit price.