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Price elasticity of demand and giving discounts (or not)
14th December 2010
If a business can identify a particular group that has more elastic demand, it may choose to use price discrimination and give that group a discount, in the hope of increasing total revenue. Discounts are often given to students and pensioners, as they tend to have lower incomes. But not everyone agrees…
I’m not sure what product is involved but it goes to show that when discussing the determinants of elasticity that “depends on” should be used - senior citizens may have relatively elastic demand for going to the movies but a business is unlikely to offer discounts where their demand is similar to the general demand or in some cases more inelastic - my grandmother is pretty keen on Susan Boyle!