Suppose a monopoly can separate its customers into two groups.If the monopoly practices price discrimination,it will charge the lower price to the group with:
A)the higher price elasticity of demand.
B)the lower price elasticity of demand.
C)the fewer close substitutes.
D)The answer cannot be determined with the information given.

Question

Quizplus · Accepted Answer

A monopoly will charge a lower price to the group with the higher price elasticity of demand because this group is more sensitive to price changes, meaning they would significantly reduce their quantity demanded if prices were higher.

Suppose a Monopoly Can Separate Its Customers into Two Groups