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.

Economics

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A mixed economic system is best described as an economy with a mix of

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Which of the following would NOT be a short-run decision for the firm?

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When deriving an Engel curve, if the optimum point for good X lies to the left as income increases, good X is

a. a normal good. b. an inferior good. c. a Giffen good. d. a substitute for good Y.

Economics