In third- degree price discrimination, markets with a smaller price elasticity of demand are ______responsive to price changes and are charged______ prices than markets with a larger price elasticity of demand.
A)more; higher
B)less; lower
C)less; higher
D)more; lower

Question

Quizplus · Accepted Answer

In third-degree price discrimination, markets with a smaller price elasticity of demand are less responsive to price changes and are charged higher prices than markets with a larger price elasticity of demand. This is because consumers in markets with a smaller elasticity of demand are less likely to switch to substitutes or reduce their consumption in response to price changes, making them willing to pay higher prices.

In Third- Degree Price Discrimination, Markets with a Smaller Price