Answer to Question #118548 in Microeconomics for harnit

Question

If the beer producers could price discriminate on the basis of blood types, in order to maximize revenue, which of the following statements is correct?
A. The consumer group with the highest price elasticity of demand should be charged the highest price.
B. The consumer group with the highest price elasticity of demand should be charged the lowest price.
C. The consumer group with the lowest price elasticity of demand should be charged the lowest price.
D. The consumer group which should be charged the highest price depends upon which has the smallest marginal utility.

Answer 1

B.

Since at high price elasticity a larger change in the number of products sold is characteristic, which leads to an increase in the manufacturer's revenue.