Suppose a Manager Is Interested in Implementing Third-Degree Price Discrimination

question 79

Multiple Choice

Suppose a manager is interested in implementing third-degree price discrimination.The manager knows that the price elasticity of demand for Group 1 is −2 and the price elasticity of demand for Group 2 is −1.2.Based on this information alone we can conclude that the price charged to Group 2 will be:

• A) the same as the price charged to Group 1.
• B) lower than the price charged to Group 1.
• C) higher than the price charged to Group 1.
• D) There is insufficient information to determine whether Group 2 will have a higher, lower, or the same price as Group 1.

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Definitions:

Health Care Prices

The cost associated with medical care, including services, procedures, and medications, which can vary widely depending on location and providers.

Supply Of Physicians

The total number of practicing doctors available in a particular area or market.

Tax Subsidy

Financial assistance provided by the government through tax benefits, reducing the tax burden for certain activities or taxpayers.

Employer-Financed Health Insurance

A health coverage plan provided by an employer to their employees as part of the employment agreement and benefits package.