A software company decides to implement price discrimination by charging different subscription fees based on user demographics. For instance, students are offered a 50% discount compared to professionals. How does this strategy reflect the principles of price discrimination in terms of market power and consumer elasticity?

Price discrimination is when a company charges different prices to different groups of people for the same product or service. In this case, the software company charges students less than professionals because students usually have less money to spend, meaning they are more sensitive to price changes, or have higher price elasticity. By offering a 50% discount to students, the company can attract more users who might not afford the full price, increasing their overall customer base and revenue. This strategy shows that the company has some market power, allowing it to set different prices based on what different groups are willing to pay. For example, if the software normally costs $100, students pay only $50, which helps the company gain loyal customers while maximizing profits from those who can afford to pay more.