Question

The municipal swimming pool charges lower entrance fees to local residents than to nonresidents. Assuming that this pricing strategy increases the profits of the pool, we can conclude that nonresidents must have a(n) ________ for swimming at the pool than residents.

a. lower demandb. more elastic demandc. less elastic demand

Answer 1

Option “C” Less elastic demand is the correct answer.

Step-by-step explanation:

Option “C” is correct because the high price is charged to that one group which has less elastic demand and the lower price is charged to the group which has a more elastic demand. If the high price is charged to more elastic demand then demand will fall greater than the demand of the group which has less elastic demand.