Given that the price elasticity of demand is -0.2 in market A and -3 in market B, what pricing strategy will a price discriminator most likely adopt?

Show Answers

Set a higher price in market ASet a higher price in market BCharge an identical price across both marketsUnable to determine which market will have a higher price

Explanation

Price discrimination typically involves charging different prices based on elasticity differences. Since market A has a less elastic demand (-0.2) compared to market B (-3), one would expect different prices. However, in this scenario, the correct answer is that the price discriminator charges the same price in both markets.