Question
1) Suppose you can separate consumers into two groups. Group 1 has a price elasticity of demand = -4 and group 2 has a price
1) Suppose you can separate consumers into two groups. Group 1 has a price elasticity of demand = -4 and group 2 has a price elasticity of -6. If you could conduct third degree discrimination, which group would you charge a higher price to? Why? Suppose the profit maximizing price for group2 is $36. What price should you charge group 1.
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Fundamentals of Managerial Economics
Authors: Mark Hirschey
9th edition
324584830, 978-0324588781, 032458878X, 978-0324584837
