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if the firm wanted to implement price discrimination, which consumer group would be charged the lowest price?

User Espinchi
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In order to maximize profits, a firm would charge the lowest price to the consumer group with the lowest price sensitivity.

This is because this group is less likely to be deterred by a higher price, and therefore the firm can capture more of their consumer surplus.

In this case, the consumer group with the lowest price sensitivity is the Price-sensitive group. This group has a price sensitivity of 0.8, meaning that they are willing to pay 80% of the maximum price for a product. The other two groups, "Price-insensitive" and "Luxury", have price sensitivities of 1.0 and 1.2, respectively. This means that they are willing to pay 100% and 120% of the maximum price, respectively.

User Vagif Abilov
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