In price discrimination, which section of the market is charged the higher price ?
Correct answer: C. The section with the most inelastic demand
- A. The section with the richest people
- B. The section with the oldest people
- C. The section with the most inelastic demand
- D. The section with the most elastic demand
Explanation
Price discrimination is most profitable where buyers are least responsive to price, because demand is inelastic and quantity falls relatively little after a price increase. Elastic-demand markets receive the lower price.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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