For a firm that can effectively price discriminate, a lower price will be charged to
A)customers who have an elastic demand for the product
B)customers who have an inelastic demand for the product
C)buyers that are members of the largest market segment
D)buyers that are members of the smallest market segment

Question

Quizplus · Accepted Answer

Lower prices will be charged to customers who have an elastic demand for the product. This means that these customers are more sensitive to changes in price, and a decrease in price will result in a significant increase in demand. By charging them a lower price, the firm can increase its revenue by attracting more customers. On the other hand, customers who have an inelastic demand for the product are less sensitive to changes in price, and they will be willing to pay a higher price for the product. Therefore, charging them a higher price will generate more revenue for the firm. The size of the market segment is not relevant in this case, as the pricing strategy is based on the elasticity of demand.

For a Firm That Can Effectively Price Discriminate, a Lower