The economic incentive for price discrimination depends on:

Question

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Price discrimination is the practice of charging different prices to different customers for the same product or service. The economic incentive for price discrimination arises from the differences among buyers' demand elasticities. Buyers who are less sensitive to price may be charged a higher price, while those who are more price-sensitive may be charged a lower price. By doing so, the seller can increase its overall profit, as it can extract more value from customers who are willing to pay more, while also attracting price-sensitive customers who may not have otherwise purchased the product or service. Differences among sellers' costs may also be a factor in price discrimination, but the primary reason for it is differences among buyers' demand elasticities. Prejudices of business managers and a desire to evade antitrust legislation are both irrelevant to the economic incentive for price discrimination.

The Economic Incentive for Price Discrimination Depends On