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Figure 16-3



Chantal owns a hairdressing salon which caters to two main groups of customers: residents of "The Chateau," a retirement community, and other residents in the neighborhood. Figure 16-3 shows the demand curves for the residents of the retirement community, labeled Market A, and other residents in the neighborhood, labeled Market B. The demand curves are not identical.


Refer to Figure 16-3. Suppose Chantal practices price discrimination. Which of the following statements is true?

• Chantal's profits will be higher if she has uniform pricing instead of different prices for different groups of customers.

• By charging a higher price in market B, Chantal has transferred some of the consumer surplus from customers in market B to customers in market A.

• By charging different prices in markets A and B, Chantal can transfer some producer surplus into economic profit.

• By charging a higher price in market B, Chantal can convert some consumer surplus into economic profit.
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Microeconomics
Edition: 7th
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By charging a higher price in market B, Chantal can convert some consumer surplus into economic profit.
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