Asked by Trap muzik Blossom on Jun 12, 2024
Verified
For a firm to maximize total profits through price discrimination,it should
A) charge a low price to high-value consumers and a high price to low-value consumers
B) charge a high price to high-value consumers and a high price to low-value consumers
C) charge a low price to high-value consumers and a low price to low-value consumers
D) charge a high price to high-value consumers and a low price to low-value consumers
Elastic Demand
A market condition where the quantity demanded of a good or service significantly changes in response to a change in price.
Inelastic Demand
A situation where the demand for a product does not significantly change with a change in price.
- Assess the strategies businesses employ to maximize earnings by differentiating prices.
Verified Answer
ME
Mohamed ElkasasJun 14, 2024
Final Answer :
D
Explanation :
Price discrimination involves charging different prices to different groups of consumers based on their willingness to pay. To maximize total profits, the firm should charge a high price to high-value consumers who are willing to pay more for the product, and a lower price to low-value consumers who are willing to pay less. Therefore, option D is the best choice since it suggests charging a high price to high-value consumers and a low price to low-value consumers.
Learning Objectives
- Assess the strategies businesses employ to maximize earnings by differentiating prices.