A price-discriminating monopolist will follow a system where
A) buyers with inelastic demand are charged higher prices than buyers with elastic demand.
B) buyers with inelastic demand are charged lower prices than buyers with elastic demand.
C) all buyers are charged the same price regardless of their elasticity of demand.
D) the price of the product is held the same even if the demand changes.

Question

Quizplus · Accepted Answer

A price-discriminating monopolist will charge higher prices to buyers with inelastic demand because they are less sensitive to price changes and will still buy the product even if the price is higher. On the other hand, buyers with elastic demand will be charged lower prices because they are more sensitive to price changes and will only buy the product if the price is lower. This allows the monopolist to maximize their profits by capturing surplus from both groups of buyers.

A Price-Discriminating Monopolist Will Follow a System Where