Problem
1. A firm cannot break even by charging uniform (nondiscriminatory) prices, but with price discrimination it can earn a small profit. Explain why in this case consumers must be better off if the firm is permitted to charge discriminatory prices.
2. It can be proved that, other things being equal, under price discrimination the price charged to some customer group will be higher the less elastic the demand curve of that group is. Why is that result plausible?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.