A Firm Sells an Identical Product to Two Groups of Consumers

question 95

Multiple Choice

A firm sells an identical product to two groups of consumers, A and B. The firm has decided that third-degree price discrimination is feasible and wishes to set prices that maximize profits. Which of the following best describes the price and output strategy that will maximize profits?

• A) P_A = P_B = MC.
• B) MR_A = MR_B.
• C) MR_A = MR_B = MC.
• D) (MR_A - MR_B) = (1 - MC).

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Definitions:

Contaminated Surface

A surface that has been exposed to potentially harmful microorganisms or chemicals, posing a risk of infection or injury.

Isopropyl Alcohol

A colorless, flammable chemical compound with a strong odor, commonly used as a disinfectant, solvent, and antiseptic.

Specimen Slide

A thin slice of material, such as tissue, mounted on a slide for examination under a microscope.

Microscope

An instrument used to view objects that are too small to be seen by the naked eye, magnifying tiny details for study or observation.