If a college student's demand for newspaper subscriptions is more price-elastic than a business executive's demand for newspaper subscriptions, which of the following pricing strategies would a price-discriminating newspaper publisher follow?
A) Charge the same rate to college students and business executives
B) Set price according to the marginal cost of printing the newspaper
C) Charge a higher price to college students
D) Charge a higher price to business executives

Question

Quizplus · Accepted Answer

Price discrimination involves charging different prices to different groups based on their price elasticity of demand. Since college students have more price-elastic demand, they are more sensitive to price changes, so the publisher would charge them a lower price and charge business executives, who have less price-elastic demand, a higher price.

If a College Student's Demand for Newspaper Subscriptions Is More