The practice of price discrimination has which of the following effects?

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Quizplus · Accepted Answer

Price discrimination involves charging different prices to different groups of customers based on their willingness to pay. As a result, groups with lower elasticity of demand (i.e. less responsive to price changes) will be charged higher prices, while groups with higher elasticity of demand will be charged lower prices. This allows the firm to capture more consumer surplus and increase profits. However, price discrimination does not necessarily lead to a decrease in total output or allocative efficiency, as it can still result in a more efficient allocation of resources. Furthermore, while price discrimination can result in prices closer to marginal cost for some customers, it is not guaranteed that all groups will pay identical prices.

The Practice of Price Discrimination Has Which of the Following