Question

To price-discriminate, a firm should charge a higher price to customers with _______ demand as compared to other consumers of this good. the same elasticity of more elastic For a fir more inelastic din charging different prices to different types of consumers, it needs to also _______ as a failure to do so would result in a loss of profits.

Answer 1

To price discriminate the firm should charge higher price to customers with a more inelastic demand as compared to other customers of this good.

Note: The consumers for whom the good is inelastic will remain unaffected by the change in price.

For a firm to succeed in charging different price to different types of consumers it needs to also prevent resale as a failure to do so would result in a loss of profit.