In the context of second-degree price discrimination, how does the elasticity of demand influence a firm's pricing strategy for different consumer segments?

Second-degree price discrimination occurs when a firm charges different prices based on the quantity consumed or the product version chosen. The elasticity of demand is important here because it measures how sensitive consumers are to price changes. For example, if a group of consumers is very responsive to price changes (high elasticity), the firm may offer lower prices to attract them, while charging higher prices to those who are less sensitive (low elasticity). This strategy helps the firm maximize its profits by capturing more consumer surplus from different segments. By understanding how much each segment is willing to pay, the firm can set prices that reflect their varying demand levels, ensuring efficiency in its pricing strategy.