Customers are encouraged to buy a larger number of a single product when a firm offers:

• A. perfect price discrimination
• B. quantity discounts
• C. price floors
• D. taxes on the product

Answer: (B)

Verified step by step guidance

1. Understand the concept of perfect price discrimination: it involves charging each customer the maximum price they are willing to pay, capturing all consumer surplus, but it does not necessarily encourage buying larger quantities of a single product.
2. Recognize what quantity discounts are: these are price reductions offered when customers buy larger quantities, which directly incentivizes purchasing more units of the same product.
3. Consider price floors: these set a minimum price above equilibrium, which typically discourages buying larger quantities because the product becomes more expensive.
4. Analyze taxes on the product: taxes increase the price paid by consumers, usually reducing the quantity demanded rather than encouraging larger purchases.
5. Conclude that among the options, quantity discounts are the mechanism that encourages customers to buy larger quantities of a single product by lowering the price per unit as quantity increases.