Hendra has divided her customers into two groups so that she can charge a higher price to one group than the other. Which of the following is TRUE about the group paying the lower price?
A)This group gains a higher marginal benefit from the product than the group paying the higher price.
B)This group has a lower reservation price than the group paying the higher price.
C)This group has more market power than the group paying the higher price.
D)This group has a more inelastic demand than the group paying the higher price.

Question

Quizplus · Accepted Answer

The group paying the lower price has a lower reservation price, meaning they are willing to pay less for the product than the other group. This is why they are charged a lower price. The other options are not necessarily true and cannot be inferred from the given information.

Hendra Has Divided Her Customers into Two Groups So That