Suppose a Producer Is Able to Separate Customers into Two

question 34

Multiple Choice

Suppose a producer is able to separate customers into two groups,one having an inelastic demand and the other having an elastic demand.If the producer's objective is to increase total revenue,he should

• A)increase the price charged to customers with the elastic demand and decrease the price charged to customers with the inelastic demand.
• B)decrease the price charged to customers with the elastic demand and increase the price charged to customers with the inelastic demand.
• C)decrease the price to both groups of customers.
• D)increase the price for both groups of customers.

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Definitions:

Dependent Variable

The variable in an experiment or study that is expected to change in response to changes in another variable known as the independent variable.

Independent Variable

A variable in an experiment that is manipulated or changed by the researcher to observe its effects on the dependent variable.

Least Squares Estimate

A statistical method used to minimize the sum of square differences between observed and estimated data points.

Dependent Variable

A variable in an experiment or model that is expected to change in response to changes in other variables.