A firm engages in price discrimination when it charges different consumers different prices when the price differences are not due to cost differences. Who would be willing to pay a higher price for the same product: consumers who have a relatively elastic demand for the product or consumers with a relatively inelastic demand? Briefly explain your answer. How would you relate this to the story in the article?

 

X Corp. said it is launching two new subscription tiers, representing the latest effort by Elon Musk to boost the company's subscription revenues while its advertising business continues to struggle. On Friday, X, formerly known as Twitter, began offering a $16 monthly tier called Premium+, which is more expensive than its previously existing option and offers the benefit of not showing the user ads in the For You or Following feeds. It also includes a host of other features such as boosted visibility, the ability to edit posts and post longer videos, and others. The company previously offered a single subscription tier, called X Premium, which starts at $8 monthly and is still an option. X is also launching a less.expensive tier costing $3 monthly for users who sign up via web browser, which the company said will include access to most key Premium features.

While advertising makes up most of the company's revenue, Musk has been seeking to grow subscriptions. He told employees shortly after taking over a year ago that the company needed to get roughly half of its revenue to come from subscriptions. One of Musk's biggest changes after acquiring the platform was overhauling its subscription service, which was previously known as Twitter Blue and is now called X Premium. Musk tied blue-check verification and some visibility boosting to that subscription service, which has also upended how people determine who is authentic on the site. Those changes have been polarizing, frustrating many users though others have applauded Musk's moves. X has been struggling to rebuild its advertising business after many advertisers pulled back from the platform following Musk's takeover out of concerns about Musk's approach to content moderation and management. Advertising represented almost 90% of Twitter's revenue in 2021, the last full year it publicly reported financial results before Musk took the company private. X Corp.

Chief Executive Linda Yaccarino, a veteran ad industry executive, has been working on rebuilding the company's ad business since she joined the company in June. Yaccarino has recently said the business is seeing improvements, saying last month that 90% of the top 100 advertisers from last year are back. Still, many large advertising agency executives say they have yet to see a largescale return to X, and that some brands are returning to the platform but spending much less. Musk posted in September that X's U.S. advertising revenue was down 60% since the acquisition. He also said that revenue is slowly improving. Musk has also said that charging users will help combat fake and spam accounts, though many industry analysts and users have raised doubts about that approach.Earlier this month, X began charging users creating new accounts on the web in New Zealand and the Philippines a $1 annual fee to post content, like posts, reply or do other key functions. The company said it is testing the program in those two countries.

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Answer Consumers with relatively inelastic demand for a product would be more willing to pay a highe... View the full answer