You are the manager of a movie theater that is the only one in a local market, so you have strong market power. You have extensively researched your customer base and realize you have two types of segmentable customers: (i) students who have an elasticity of demand for movies of - 2.7 and (ii) senior citizens who have an elasticity of demand for movies of - 5.1. Which of the following pricing schemes would you employ to enhance profits? a. Set higher prices to the students as their demand is relatively more elastic. b. Set higher prices to the students as their demand is relatively more inelastic. c. Set higher prices to the senior citizens as their demand is relatively more elastic. d. Set higher prices to the senior citizens as their demand is relatively more inelastic.
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