Cameron sells premium steak at the local market. He has a lot of customers due to the promising taste and texture of his steak. One kilogram of his premium steak costs $80.50. However, it would only cost $68.50 per kilogram if a customer buys 3 kilograms and $58.50 per kilogram if a customer buys 5 kilograms. Cameron can supply 100 kilograms of premium steak in a day, but his supply only lasts for an hour and a half. Which of the following statements is true? With this pricing scheme, Cameron is extracting all the consumer surplus. O Cameron is basing his pricing scheme on the maximum amount a customer is willing to pay for his premium steak. Cameron is using third degree price discrimination by charging different prices for different "blocks" of kilograms for his premium steak. Cameron receives a larger revenue and profts with this pricing scheme compared to charging a single lower price for larger quantities. None of the above are true.
Cameron sells premium steak at the local market. He has a lot of customers due to the promising taste and texture of his steak. One kilogram of his premium steak costs $80.50. However, it would only cost $68.50 per kilogram if a customer buys 3 kilograms and $58.50 per kilogram if a customer buys 5 kilograms. Cameron can supply 100 kilograms of premium steak in a day, but his supply only lasts for an hour and a half. Which of the following statements is true? With this pricing scheme, Cameron is extracting all the consumer surplus. O Cameron is basing his pricing scheme on the maximum amount a customer is willing to pay for his premium steak. Cameron is using third degree price discrimination by charging different prices for different "blocks" of kilograms for his premium steak. Cameron receives a larger revenue and profts with this pricing scheme compared to charging a single lower price for larger quantities. None of the above are true.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Cameron sells premium steak at the local market. He has a lot of customers due to the promising taste and texture of his steak. One
kilogram of his premium steak costs $80.50. However, it would only cost $68.50 per kilogram if a customer buys 3 kilograms and $58.50
per kilogram if a customer buys 5 kilograms. Cameron can supply 100 kilograms of premium steak in a day, but his supply only lasts for
an hour and a half.
Which of the following statements is true?
With this pricing scheme, Cameron is extracting all the consumer surplus.
Cameron is basing his pricing scheme on the maximum amount a customer is willing to pay for his premium steak.
Cameron is using third degree price discrimination by charging different prices for different "blocks" of kilograms for his premium steak.
Cameron receives a larger revenue and profts with this pricing scheme compared to charging a single lower price for larger quantities.
None of the above are true.
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