A price-discriminating monopolist will tend to charge a lower price to students if it believes that students:
A) have a lower willingness to pay than other demanders.
B) have a greater willingness to pay than other demanders.
C) have very elastic demand curves.
D) have nearly vertical demand curves.

Question

Quizplus · Accepted Answer

Price discrimination is all about charging different prices for the same good based on the willingness to pay of different groups of consumers. If the monopolist believes that students have a lower willingness to pay than other demanders, it will tend to charge them a lower price to capture their demand. This is because charging a higher price to students would result in a significant loss of demand due to their lower ability/necessity to purchase the good at a higher price.

A Price-Discriminating Monopolist Will Tend to Charge a Lower Price