A price-discriminating firm will adjust prices so that customers with more _____ demand pay _____ customers with _____ elastic demand.

Question

Quizplus · Accepted Answer

A price-discriminating firm will charge a higher price to customers with a less elastic demand (i.e. customers who are willing to pay more and are less price-sensitive) and a lower price to customers with a more elastic demand (i.e. customers who are more price-sensitive and have more alternatives). Therefore, option B is the correct answer as it states that customers with more elastic demand pay less than customers with less elastic demand.

A Price-Discriminating Firm Will Adjust Prices So That Customers with More