Asked by Kristin Kowing on Jul 04, 2024
Verified
For a firm to maximize total profits through price discrimination,it should
A) Charge a high price to consumers with an inelastic demand and low price to consumers with an elastic demand
B) Charge a low price to consumers with an inelastic demand and high price to consumers with an elastic demand
C) Charge the same price to both sets of consumers
D) Charge nothing to both set of consumers-throw a party
Elastic Demand
A situation where the demand for a product or service significantly changes in response to a change in price, indicating consumers' sensitivity to price changes.
Inelastic Demand
A situation where the demand for a product or service remains relatively unchanged despite changes in its price.
- Examine the techniques organizations apply to enhance profitability through varied pricing strategies.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
A
Explanation :
Price discrimination involves charging different prices to different consumers based on their willingness to pay. Charging a high price to those with inelastic demand (who are less sensitive to price changes) and a low price to those with elastic demand (who are more sensitive to price changes) maximizes total profits by capturing more consumer surplus.
Learning Objectives
- Examine the techniques organizations apply to enhance profitability through varied pricing strategies.