Suppose a Producer Is Able to Recognize Two Different Groups

question 10

Multiple Choice

Suppose a producer is able to recognize two different groups of customers, one having an elastic demand and the other having an inelastic demand. Price discrimination by the producer would most likely

• A) involve decreasing the price for only the group with inelastic demand.
• B) involve decreasing the price for only the group with elastic demand.
• C) not occur because it is illegal.
• D) involve increasing the price for both groups.
• E) involve increasing the price only for the group with elastic demand.

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