The Liberty Theater would engage in price discrimination by charging higher prices to nonstudents, who have less elastic demand curves, and lower prices to students, who have more elastic demand curves.

Question

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Price discrimination involves charging different prices to different groups of consumers for the same product, based on their willingness or ability to pay. In this case, charging nonstudents higher prices and students lower prices is an example of price discrimination, as it differentiates pricing based on the elasticity of demand between these two groups.

The Liberty Theater Would Engage in Price Discrimination by Charging