A price-discriminating monopoly firm will tend to charge a higher price to customers who have an inelastic demand than it does to customers with an elastic demand.

Question

Quizplus · Accepted Answer

This statement is true as a price-discriminating monopoly firm has the ability to segment its market and charge different prices to different groups of customers based on their willingness to pay. Customers with an inelastic demand are willing to pay more for the product and therefore, the firm will charge them a higher price. Customers with an elastic demand are more price-sensitive and the firm will charge them a lower price to attract their business.

A Price-Discriminating Monopoly Firm Will Tend to Charge a Higher