If a company uses third-degree price discrimination
A) the higher the price elasticity of demand, the higher the price charged.
B) the higher the price elasticity of demand, the lower the price charged.
C) the more inelastic the demand, the lower the price charged.
D) each customer is charged the maximum price he or she is willing to pay.

Question

Quizplus · Accepted Answer

Third-degree price discrimination involves charging different prices to different groups of consumers based on their price elasticity of demand. Groups with a higher price elasticity of demand (meaning they are more sensitive to price changes) are charged lower prices to encourage more purchases, while groups with lower elasticity (less sensitive to price changes) are charged higher prices.

If a Company Uses Third-Degree Price Discrimination