Each week, a department store places a different item of clothing on sale. Which

Question

Each week, a department store places a different item of clothing on sale. Which of the following is an explanation based on price discrimination for why the store conducts such regular sales? O A. The store attempts to sell the item to customers with relatively inelastic demand first, and then sells to customers with relatively elastic demand later O B. The store attempts to sell the item to customers with relatively elastic demand first, and then sells to customers with relatively inelastic demand later. C The store attempts to sell the item to customers with high reservation prices first, and then sels to customers wth lo ver reservation prices later. OE. Both A and B.

Explanation / Answer

In the given scenario, the department is making an attempt to discriminate prices in such a manner that:

1) it serves the need of customers with inelastic demand by providing them one item as an offer for sale everytime they visit the store and, also changing the item everyweek so that the needs of people with elastic demand can also be served.

2) it is making an attempt to offer high reservation price customers something to choose everytime they visit the store. But, by providing low cost items on some weeks, it is also trying to capture the market share with low reservation price customers.

Hence, the correct answer is D) Both A and C

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