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Why monopoly sellers usually offer discount prices to buyers who are willing to mail in a rebate coupon or endure some other type of inconvenience?
Why monopoly sellers usually offer discount prices to buyers who are willing to mail in a rebate coupon or endure some other type of inconvenience?
Expert Solution
A monopolist is the sole seller and single producer in a market and all buyers and consumers are purchasing whatever is being provided by the sellers without a choice. However, it is important to note that any changes in the price that benefit the consumers, attracts more consumers than before and induce the old ones to purchase more. This strategy is implied keeping in mind the fact that if discounts are provided to consumers for mailing in a rebate coupon, they will be encouraged to purchase more and when consumer endure any sort of inconvenience it would discourage the customer from buying more which means that if discounts are offered for such endurances, the customers willingness will not deter and it would build a solid image amongst the customers thus increasing the demand overall.
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