Chapter 63, Problem 5MCQ

To determine

Demand curve of the consumer when a higher price is charged by a price-discriminating monopolist.

Answer to Problem 5MCQ

(a) A more inelastic demand.

Explanation of Solution

The high price is charged by a price-discriminating monopolist when the consumer’s demand is inelastic because demand does not significantly change even if the price increases which means demand is less responsive to changes in price. Hence, option (a) is correct and option (b) is incorrect.

Higher-income, lower willingness to pay, and less experience in the market are irrelevant in charging higher prices in case of price discrimination. Hence, options (c), (d), and (e) are incorrect.

Economics Concept Introduction

Different prices are charged for the different consumers for the same good in a price-discriminating monopolist. A low price is charged when demand is more elastic, and a high price is charged when demand is more inelastic.