In order to engage in price discrimination, a monopolist has to be able to determine that there are different groups of consumers that have different ________ for the product.
A) income elasticities of demand
B) price elasticities of demand
C) cross elasticities of demand
D) All of the above are correct.

Question

Quizplus · Accepted Answer

Price discrimination involves charging different prices to different groups of consumers based on their willingness and ability to pay. Therefore, the monopolist needs to be able to identify these groups of consumers with different price elasticities of demand, which indicates the responsiveness of quantity demanded to changes in price. Income elasticity of demand measures the sensitivity of quantity demanded to changes in income levels, which is not directly related to price discrimination. Cross elasticity of demand measures the responsiveness of quantity demanded of one product to changes in the price of a related product, which is also not directly related to price discrimination.

In Order to Engage in Price Discrimination, a Monopolist Has