Economics Price Discrimination Questions
Price discrimination affects market segmentation by dividing the market into different segments based on consumers' willingness to pay. It allows businesses to charge different prices to different groups of consumers based on their perceived value or ability to pay. This segmentation enables businesses to maximize their profits by extracting higher prices from consumers with a higher willingness to pay, while still attracting price-sensitive consumers with lower prices. Overall, price discrimination helps businesses target different consumer segments more effectively and capture a larger share of the market.