Children's price elasticity of demand for hot chocolate is 0.5.Adults' price elasticity of demand for hot chocolate is 1.5.If the concession stand selling the hot chocolate wants to practice price discrimination,it should charge higher prices to children.

Question

Quizplus · Accepted Answer

The concession stand should charge higher prices to the group with a lower price elasticity of demand, which in this case is children (0.5 < 1.5). With a lower price elasticity, children are less likely to decrease their demand for hot chocolate in response to a price increase, making them a more profitable target for price discrimination.

Children's Price Elasticity of Demand for Hot Chocolate Is 0