Under third-degree price discrimination,a producer makes profit by:
A)reducing the price of the good for every additional unit being purchased.
B)charging a higher price to the market segment with the more inelastic demand.
C)rationing the good to be sold to consumers in different markets.
D)keeping the price level steady in all markets.

Question

Quizplus · Accepted Answer

Under third-degree price discrimination, the producer charges a higher price to the market segment with the more inelastic demand. This segment is less sensitive to price changes and will still purchase the good at a higher price, allowing the producer to make a higher profit.

Under Third-Degree Price Discrimination,a Producer Makes Profit By