With lower reservation prices, that is, price discriminate, what problem might you encounter?
a. You may be unable to prevent people who buy at the lower prices from reselling them at higher prices to wealthy buyers.
b. Your producer surplus will decrease if you sell to customers with lower reservation prices.
c. You don't have sufficient market power to vary the prices you charge.
d. You have no way of confirming whether your buyers are wealthy or not.
You make unique hand-crafted quartz nose rings that you sell to wealthy film stars in Bel-Air, California, at prices well above your marginal cost. If you wanted to expand your profits by marketing your rings at lower prices to customers with lower reservation prices, that is, price discriminate, what problem might you encounter?
a. You may be unable to prevent people who buy at the lower prices from reselling them at higher prices to wealthy buyers.
b. Your producer surplus will decrease if you sell to customers with lower reservation prices.
c. You don't have sufficient market power to vary the prices you charge.
d. You have no way of confirming whether your buyers are wealthy or not.