Question
Car manufacturers usually sell popular new models at full listed price for the first 3-6 months. After this initial period, they offer rebates or discounts
Car manufacturers usually sell popular new models at full listed price for the first 3-6 months. After this initial period, they offer rebates or discounts on those models. The marginal cost of these cars is the same at all times. Which is true?
A. firms are engaging in first-degree price discrimination
B. early buyers have higher reservation prices for the new models and auto manufacturers maximize profits by charging them a higher price
C. marginal revenue from early buyers is higher than marginal revenue from those who buy later
D. marginal revenue from later buyers is higher than marginal revenue from early buyers
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