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Charging a higher price to those with less elastic demand and a lower price to those with more elastic demand than it would if it could not price discriminate. Charging a higher price to those with less elastic demand and a lower. Learn how discriminating monopolies charge different consumer prices, maximize profit through pricing strategies, and explore examples illustrating their market impact.
Identify the key concept that underlies price discrimination by focusing on demand elasticity and how monopolists adjust prices for different consumer groups accordingly. Charging a higher price to everyone, regardless of their price sensitivity.c Price discrimination involves charging different prices to different customers for the same product or service, based on their willingness to pay
A firm can increase profits by charging higher prices to customers with less elastic demand (those who are less sensitive to price changes) and lower prices to customers with more elastic demand (those who are more sensitive to price changes)
A competitive firm will produce until marginal cost equals the market price — producing more or less than this will lower profits Under perfect price discrimination, the marginal revenue curve coincides with the market demand curve, so the monopolist will also produce until marginal cost equals price. Price discrimination means charging different prices to different customers for the same product If a firm has to charge the same price to all customers, p m and q m will maximize profits.
If an economist increases sales from 100 to 110by decreasing its price from 12 to 11 then marginal revenue is 1 a price discriminating monopolist can increase profits if she charge a higher price to those with less elastic demand and a lower price to those with more elastic demand than she would if she could not price discriminate How monopolists use it to maximize profits by charging different prices based on customer willingness to pay. This strategy maximizes revenue by capturing consumer surplus, allowing the monopolist to adjust prices based on how sensitive different consumer groups are to price changes Therefore, the correct answer is option c.
Charging a lower price to everyone, regardless of their price sensitivity.b
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