Firms who are attempting to engage in price discrimination will offer customers with a ________ demand a higher price and customers with a(n) ________ demand a lower price.
A) lower; higher
B) normal; inferior
C) less elastic; more elastic
D) more elastic; less elastic

Question

Quizplus · Accepted Answer

Price discrimination involves charging different prices to different groups of customers based on their willingness to pay. In order for price discrimination to be successful, the firm must be able to identify different price elasticities of demand among its customers. Customers with a less elastic demand (i.e. those who are less sensitive to changes in price) can be charged a higher price, while customers with a more elastic demand (i.e. those who are more sensitive to changes in price) must be charged a lower price in order to capture their business. Therefore, C is the correct answer.

Firms Who Are Attempting to Engage in Price Discrimination Will