PRC-3 · Chapter 12 · Question 58 of 69
Price discrimination by a monopoly (charging different prices to different groups) is impossible or highly ineffective if:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The two market segments have exactly the same price elasticity of demand
Explanation
Profitable price discrimination requires different groups to have different sensitivities to price (elasticities). If both groups react identically, charging different prices yields no benefit.
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