In third- degree price discrimination, markets with a larger price elasticity of demand are _______ responsive to price changes and are charged ______prices than markets with a smaller price elasticity of demand.
A)more; higher
B)more; lower
C)less; higher
D)less; lower

Question

Quizplus · Accepted Answer

In third-degree price discrimination, sellers charge different prices to different segments of the market. Markets with a larger price elasticity of demand are more responsive to price changes, meaning consumers are more likely to reduce their purchases if prices rise. Therefore, these markets are charged lower prices to maximize revenue by selling a higher quantity at a lower price.

In Third- Degree Price Discrimination, Markets with a Larger Price