CFA Practice Question

CFA Practice Question

In order to be effective, price discriminators must be able to:
A. identify and separate at least two groups with differing elasticities of demand and prevent those who buy at the low price from reselling to the customers charged higher prices.
B. identify the high elasticity group of consumers and charge a higher price while charging a lower price to the inelastic group.
C. identify and separate at least two groups with differing elasticities of demand and prevent knowledge of the different prices from reaching the two groups.
Explanation: In order to gain from price discrimination, the firm must be able to identify and separate at least two groups with differing elasticities of demand and prevent those who buy at the low price from reselling to the customers charged higher prices.

User Contributed Comments 4

User Comment
Dinosaur think movie theaters ...
johnmullrooney think airplanes!
czar Think student discounts :)
smettias GREAT EXPLANATION
You need to log in first to add your comment.