Question

Arturo makes and sells organic frozen yogurt with fresh fruit toppings. He wants to price discriminate according to a preference for organic food so that those with the most inelastic demand for organic food pay the highest price. To accomplish this, to which group should he give discount coupons for his yogurt

Answer 1

B. Customers of the local fast-food restaurant

Step-by-step explanation:

Inelastic demand is when a buyer's demand for a product does not change as much as its change in price.

Answer choices:
A. Members of the local organic food co-op

B. Customers of the local fast-food restaurant

C. Students at the local art school

D. People who come to the community's weekly farmer's market

A. Members of the local organic food co-op and D. People who come to the community's weekly farmer's market are similar. If people are already buying organic foods, they are more likely to be elastic when the price changes meaning they will find a substitute.

C. Students at the local art school is incorrect because the students would look for substitutes when the price increases after discounts.

B. Customers of the local fast-food restaurant is the most likely group to keep buying the organic yogurt to stay healthy even when the price increases.