When a Firm Is Practicing Price Discrimination in Two Markets

question 49

Multiple Choice

When a firm is practicing price discrimination in two markets, the profit maximizing condition is met at:

• A) MR_F = MC_F + MC_T
• B) MR_F = MC_F - MC_T
• C) MR_A = MR_B = SMC.
• D) MR_A + MR_B = SMC.
• E) MR_A - MR_B = SMC.

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Definitions:

Uncovered Interest Parity

An economic theory that states the difference in interest rates between two countries equals the expected change in exchange rates between those countries' currencies.

Exchange Rate

The price of one country's currency expressed in another country's currency.

Interest Rates

The proportion of a loan that is charged as interest to the borrower, typically expressed as an annual percentage of the loan outstanding.