Question

Ceteris paribus, a price-discriminating firm will charge less to the customers who: a. have the lowest incomes. b. have the least elastic demand for its product. c. are the most elastic in their demand for a product. d. are the most rational in making their decisions.

Answer 1

Option C is the correct one.

Are the most elastic in their demand for a product.

Step-by-step explanation:

Ceteris paribus, a price-discriminating firm will charge less to the customers who are the most elastic in their demand for a product.

Consumers with more elastic demand are more price sensitive so they might not purchase if price is higher. Hence a less price is charged from consumers with elastic demand.

Answer 2

. are the most elastic in their demand for a product.

Step-by-step explanation:

Price discrimination is when a producer sells the same good at different prices to consumers.

Elasticity of demand measures the responsiveness of quantity demanded to changes in price.

The more elastic demand is, the more sensitive demand is to changes in price.

The less elastic demand is, the less sensitive demand is to changes in price.

A price discriminating seller who wants to maximise profits would charge higher prices to the consumer with a less elastic demand and a lower price to a consumer with a more elastic demand.

I hope my answer helps you