Question
41. A gas station owner, reacting to some consumer agitation about rising prices, decides to offer a per-gallon discount for two days a week. However,
41. A gas station owner, reacting to some consumer agitation about rising prices, decides to offer a per-gallon discount for two days a week. However, the owner decides to not advertise the days on which the discounts will be in effect. The owner doesn't quite know which customers are discount-seekers and which are not, but she figures this will work to the business' advantage as only the most price-sensitive consumers will take the trouble to find out which two days will have lower prices. Price-insensitive consumers will not take the trouble to discover the discount days, and will only randomly fuel up when the discounts are on. On average, then, the price-insensitive customers will pay a higher price than price-sensitive customers.
The best description for this pricing strategy is:
a. First-degree price discrimination.
b. Second-degree price discrimination.
c. Third-degree price discrimination.
b. Block pricing.
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