Why is it important that a firm have different groups of consumers with different demand elasticities if it wishes to engage in price discrimination?
What will be an ideal response?
Price discrimination works because a firm charges higher prices to individuals with a relatively more inelastic demand and lower prices to those with a relatively more elastic demand. If all consumers have the same elasticity of demand then charging different prices to different groups of consumers will not yield a higher profit to the firm.
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A period of sustained decline in output in an economy is known as a(n) _____
a. expansion b. stagnation c. peak d. trough e. contraction
Aggregate demand is about _________ and aggregate supply is about _________.
Fill in the blank(s) with the appropriate word(s).
The barrier to entry that sustains a natural monopoly is:
A. economies of scale. B. implicit price fixing agreements. C. government regulation. D. patent protection.
Along the supply curve of lifeguards at local public pools,
a. the wage paid to lifeguards is held constant b. the number of lifeguards is held constant c. the wage paid to lifeguards at private clubs is held constant d. the demand for lifeguards is assumed constant e. the admission price to these public pools rises as the wage rate for lifeguards increases