GENERAL KNOWLEDGE

GK

BUSINESS ECONOMICS

Question [CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
Price discrimination is profitable and possible of the two market have
A
Inelastic demand
B
High Elastic Demand
C
Equal Elasticity of Demand
D
Different Elasticity of Demand
Explanation: 

Detailed explanation-1: -Price discrimination will be profitable only if the elasticity of demand in different markets in which the total market has been divided is different, since, that would give the firm an opportunity to charge differing prices and generate higher revenues.

Detailed explanation-2: -To price discriminate, a firm must have a certain level of monopoly, the ability to separate the market, and prevent re-sale. Additionally, the consumers must vary in their price elasticity of demand.

Detailed explanation-3: -Understanding Price Discrimination Whether price discrimination works and for how long the various groups are willing to pay different prices for the same product depends on the relative elasticities of demand in the sub-markets.

There is 1 question to complete.