A Third-Degree Price Discriminating Monopolist Can Sell Its Output Either

question 116

Multiple Choice

A third-degree price discriminating monopolist can sell its output either in the local market or on an internet auction site (or both) . After selling all of its output, the firm discovers that the marginal revenue earned in the local market was $20 while its marginal revenue on the internet auction site was $30. To maximize profits the firm should:

• A) have sold more output in the local market and less at the internet auction site.
• B) do nothing until it acquires more information on costs.
• C) have sold less output in the local market and more on the internet auction site.
• D) sell less in both markets until marginal revenue is zero.
• E) sell more in both markets until marginal cost is zero.

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Definitions:

Real Per Capita GDP

The measure of a country's economic output that accounts for its number of people and adjusts for inflation, indicating the average economic well-being of its citizens.

Net Exports

The value obtained by subtracting a country's total value of imports from its total value of exports, representing a component of a country's GDP.

Real GDP

Real GDP measures the value of all final goods and services produced within a country's borders in a given time period, adjusted for inflation.

GDP Deflator

An index reflecting the price levels for all newly produced, domestic, final goods and services within a country.