Assume a firm is practicing “price discrimination by self-selection” by creating a few versions for its main product. A customer’s willingness to pay for the product:depends on the prices for the same version set by the firm’s rivalsdepends on the volume of purchases made by the customeris revealed by customer’s observable characteristicsis revealed by customer’s choice of the version

Price discrimination by self-selection is a strategy where a firm offers different versions of its product at different prices, allowing customers to select the version that best suits their willingness to pay.

1. A customer’s willingness to pay for the product depends on the prices for the same version set by the firm’s rivals: This is true. If a rival firm offers the same version of a product at a lower price, a customer may be more willing to purchase from the rival firm, assuming all other factors are equal.

2. Depends on the volume of purchases made by the customer: This can also be true. If a customer is buying in bulk or frequently, they may be willing to pay a higher price for a version of the product that offers more value or convenience.

3. Is revealed by customer’s observable characteristics: This is not always true. While observable characteristics such as age, income, or location can give some indication of a customer's willingness to pay, they do not provide a complete picture. Other factors such as personal preferences, perceived value of the product, and the customer's current financial situation can also influence their willingness to pay.

4. Is revealed by customer’s choice of the version: This is true. By choosing a particular version of a product, a customer reveals their willingness to pay for the features and benefits that version offers. For example, a customer who chooses a premium version of a product over a basic version is demonstrating a higher willingness to pay.