When a Firm Practices Price Discrimination in Two Market Segments

question 5

Multiple Choice

When a firm practices price discrimination in two market segments, the firm:

• A) must be able to identify market segments that have different price elasticities.
• B) will typically charge higher prices in the larger market segment.
• C) must be selling a heterogeneous product.
• D) must choose market segments that have inelastic demand.
• E) sets price according to the different costs of serving different market segments.

---

Definitions:

McCarthy's Rantings

Refers to the careless and aggressive accusations made by Senator Joseph McCarthy during the 1950s, particularly against alleged communists in the U.S.

Unemployment Rate

The percentage of the labor force that is jobless and actively looking for employment, used as an indicator of the health of an economy.

G.I. Bill

Enacted in 1944, a law that provided various benefits to returning World War II veterans, including educational grants and loan guaranties for homes.

FHA Loans

Mortgages insured by the Federal Housing Administration, designed to help borrowers obtain homes by lowering some of the costs of their mortgage loans.