The Following Graph Shows the Demands and Marginal Revenue in Two

question 49

Multiple Choice

The following graph shows the demands and marginal revenue in two markets,1 and 2,for a price discriminating firm along with total marginal revenue,MR_T,and marginal cost. How should the firm allocate sales between the two markets?

• A)150 in each market
• B)100 in market 1,175 in 2
• C)150 in market 1,300 in 2
• D)112.5 in each market
• E)75 in market 1,150 in 2

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Definitions:

EBIT

Earnings Before Interest and Taxes, a financial metric used to evaluate a company's operating performance.

Free Cash Flow

The cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.

Capital Expenditures

Funds used by a company to acquire or upgrade physical assets such as property, industrial buildings, or equipment to boost its long-term revenue.

Depreciation

The accounting method of allocating the cost of a physical or tangible asset over its useful life, reflecting the asset's consumption, wear and tear, or obsolescence.