Homework Help: Economics

Posted by Carol on Tuesday, March 20, 2012 at 10:53pm.

Suppose a manager is interested in implementing third-degree price discrimination. The manager knows that the price elasticity of demand for Group 1 is -2 and the price elasticity of demand for Group 2 is -1.2. Based on this information alone we can conclude that the price charged to Group 2 will be

A. the same as the price charged to Group 1.

B. lower than the price charged to Group 1.

C. higher than the price charged to Group 1.

D. there is insufficient information to determine whether Group 2 will have a higher, lower or the same price as Group 1.

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