Final answer:
Cumulative quantity discount is indeed a pricing strategy designed to drive higher volume purchases by offering discounts that accumulate as customers purchase more over time. This strategy is true and works by incentivizing customers to increase their purchase quantities to receive greater discounts. a is correct.
Step-by-step explanation:
The statement 'Cumulative quantity discount is an example of a pricing strategy' is true. A cumulative quantity discount is a pricing strategy used by sellers to encourage buyers to purchase larger quantities by offering a discount based on the quantity of goods purchased over a set period. This type of discount accrues as customers increase their total purchases with the seller during the discount period.
Considering the reference provided in the question, though it touches upon pricing and quantity demanded, it relates more to the concept of price elasticity of demand than cumulative quantity discounts. The scenario from Point B to Point C, where price rises from $70 to $80 and quantity demanded (Qd) decreases from 2,800 to 2,600, illustrates a typical reaction in the market when prices increase - quantity demanded tends to fall. This however is a separate concept from cumulative quantity discounts.
If you were to apply this knowledge to a real-life business scenario, imagine if a wholesale supplier offers a rebate at the end of the year based on the total volume of goods you have purchased. The more you buy throughout the year, the larger your end-of-year discount will be. This essentially is a cumulative quantity discount at work.