A firm practicing group price discrimination that has constant marginal cost will
A)maximize total profit by maximizing profit for each group separately.
B)charge the same price to all groups.
C)act like a monopoly and treat all groups the same.
D)set p = MC.

Question

Quizplus · Accepted Answer

A firm practicing group price discrimination with constant marginal cost can charge a higher price to the group with a more inelastic demand and a lower price to the group with a more elastic demand. This will allow the firm to increase its total profit by capturing a greater share of the surplus from each group than it would if it charged a single price to all groups. Therefore, the firm should maximize profit for each group separately.

A Firm Practicing Group Price Discrimination That Has Constant Marginal