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5. A firm that practices price discrimination based on the price elasticity of demand will charge: a. a higher price to buyers whose demand is

5. A firm that practices price discrimination based on the price elasticity of demand will charge:

a. a higher price to buyers whose demand is relatively[ (circle one) elastic or inelastic]

b. a lower price to buyers whose demand is relatively [ (circle one) elastic or inelastic ] and

6. a. T F In general profit-maximizing firms price discriminate or give discounts to senior citizens out of concern for the economic hardship they may face.

b. T F An insurance company offering discounts to safe drivers is an example of price

discrimination.

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