There are seven consumers, each of whom is hungry for exactly one Butterfinger.

Question

There are seven consumers, each of whom is hungry for exactly one Butterfinger. The consumers' maximum willingness to pay is given in the table below:



Assume that the seller is unable to perfectly price-discriminate, and instead decides to segment her customers into two groups, each of which will be charged a different price. Assume the seller can choose to group people either by gender or by age, but not both. In order to maximize profit, how should the seller group buyers?

By age, with older people paying more than younger people. By gender, with men paying more than women. By age, with younger people paying more than older people. By gender, with women paying more than men.

Explanation / Answer

It is clear from the table that all yonger people are willing ot pay a higher price as compared ot older people. However,it is difficult to find any correlation between willingness ot pay price on the basis of gender.

By age, with younger people paying more than older people.

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