Answered: Price discrimination is most effective…

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Economics

Price discrimination is most effective if all consumers have the same price elasticity of demand. * True False

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter12: Monopoly

Section: Chapter Questions

Problem 8DQ

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Concept explainers

Price Discrimination

Price discrimination or differential pricing is based on the principle that the seller will charge the buyer a price based on the buyer’s ability and willingness to pay for the product rather than applying uniform pricing for all.

Question

Price discrimination is most effective if all consumers have the same
price elasticity of demand.
True
False

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In third-degree price discrimination, consumer groups with the largest price elasticity of demand will pay the lowest price compared to the consumer groups with smaller price elasticities. True or False.
Price discrimination leads to higher price for all consumer . True or false
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