Related to the Economics in Practice on page 281: The foreign visitors to the temples of Laos are typically much richer than the local Laotians. Based on the difference in demand elasticity of foreign visitors and local visitors, the optimal strategy for the temples to maximize revenue is to
A) charge a higher price to foreign visitors than to local residents.
B) charge a lower price to foreign visitors than to local residents.
C) charge the same price to foreign visitors and to local residents.
D) not charge for admission and rely instead on donations from both local residents and foreign visitors.

Question

Quizplus · Accepted Answer

Foreign visitors, typically being much richer than the local Laotians, are likely to have a less elastic demand for visiting the temples. This means they are less sensitive to price changes compared to local visitors. Therefore, charging higher prices to foreign visitors can maximize revenue because they are willing to pay more for the experience, while a lower price for locals can accommodate their more price-sensitive demand.

Related to the Economics in Practice on Page 281: the Foreign