In graduated pricing, which units receive the lower price?

In graduated pricing, which units receive the lower price?

• A. All units
• B. The last tier units
• C. Only units above a quantity tier
• D. The first tier units

Answer: (C)

In graduated pricing, the unit price steps down as you move into higher quantity tiers, but the discount applies only to the portion of units that falls into those higher tiers. The initial units that sit in the lower tiers are charged at their higher (higher-tier) rate, and only the additional units that cross into the next tier are charged at the lower rate. For example, if the first tier covers up to 10 units at $10 each, and the next tier covers 11–100 units at $8 each, buying 15 units would be billed as 10 × $10 plus 5 × $8, totaling $140. Here, the lower price applies to units 11–15, not to all units. So the correct concept is that only units above a quantity tier—the ones that fall into higher tiers—receive the lower price. The initial units stay at the higher price, and the discount is applied to the units beyond the threshold.

In graduated pricing, the unit price steps down as you move into higher quantity tiers, but the discount applies only to the portion of units that falls into those higher tiers. The initial units that sit in the lower tiers are charged at their higher (higher-tier) rate, and only the additional units that cross into the next tier are charged at the lower rate.

For example, if the first tier covers up to 10 units at $10 each, and the next tier covers 11–100 units at $8 each, buying 15 units would be billed as 10 × $10 plus 5 × $8, totaling $140. Here, the lower price applies to units 11–15, not to all units.

So the correct concept is that only units above a quantity tier—the ones that fall into higher tiers—receive the lower price. The initial units stay at the higher price, and the discount is applied to the units beyond the threshold.