Question

3.CHOOSE ONLY ONE ANSWER. If it does pay to practice third-degree price discrimination, the price will...

3.CHOOSE ONLY ONE ANSWER. If it does pay to practice third-degree price discrimination, the price will be lower in the market where

a. demand curve is steeper

b. demand curve is flatter

c. demand is less elastic

d. demand is more elastic

Homework Answers

Answer #1

d . demand is more elastic

REASON,

in third price discrimination, a monopolist divides consumers into two or more groups based on their elasticities.

Hence higher price would be charged to consumers with lower demand elasticity because the monopolist has much leverage as demand would be less responsive to a change in price whereas, for demand with higher elasticity, the monopolist doesn't have much leverage because demand is highly responsive to a change in price

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