The managers of Movies Plus, a large movie theater, want to practice third-degree price discrimination. The managers have learned that college students have an own price elasticity of demand of 1.5 for tickets at Movies Plus and adults have an own price elasticity of 1.2. If the managers have correctly determined the third-degree profit-maximizing price for adults is $15, what is the third-degree profit-maximizing price to charge students? Group of answer choices (1)$13.50 (2)$10.00 (3)$7.50 (4)$8.50

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Price Discrimination

Price discrimination or differential pricing is based on the principle that the seller will charge the buyer a price based on the buyer’s ability and willingness to pay for the product rather than applying uniform pricing for all.