In general, price discrimination is based on differences in _______ among different groups of customers and the differences in _______ that will result.
A) preferences; marginal costs
B) price elasticity of demand; profits
C) marginal revenue; marginal costs
D) products; marginal costs

Question

Quizplus · Accepted Answer

Price discrimination is based on charging different prices to different groups of customers based on their price elasticity of demand. This means that prices are set higher for customers who are less price sensitive and lower for those who are more price sensitive. The result of price discrimination can be increased profits for the firm since they are able to capture more of the consumer surplus that would otherwise go to customers.

In General, Price Discrimination Is Based on Differences in _______