Suppose a producer is able to separate customers into two groups,one having an inelastic demand and the other having an elastic demand.If the producer's objective is to increase total revenue,he should
A)increase the price charged to customers with the elastic demand and decrease the price charged to customers with the inelastic demand.
B)decrease the price charged to customers with the elastic demand and increase the price charged to customers with the inelastic demand.
C)decrease the price to both groups of customers.
D)increase the price for both groups of customers.

Question

Quizplus · Accepted Answer

For customers with elastic demand, lowering the price increases total revenue as they are sensitive to price changes. For customers with inelastic demand, raising the price increases total revenue as they are less sensitive to price changes.

Suppose a Producer Is Able to Separate Customers into Two