A firm that is engaging in price discrimination will
A) charge a higher price to consumers with a higher price elasticity of demand.
B) charge a higher price to consumers with a lower price elasticity of demand.
C) earn lower profits than a similar firm that does not engage in price discrimination.
D) generally be a perfectly competitive firm.

Question

Quizplus · Accepted Answer

Price discrimination involves charging different prices to different consumers based on their willingness to pay. Consumers with a lower price elasticity of demand (meaning they are less sensitive to price changes) are typically charged higher prices because they are willing to pay more before reducing their quantity demanded.

A Firm That Is Engaging in Price Discrimination Will