Consider a Monopolist That Is Able to Distinguish Between Two

question 18

Multiple Choice

Consider a monopolist that is able to distinguish between two distinct market segments,A and B,for its product.Marginal cost is constant at $18 for each unit produced.The firm is currently selling its output at a single price and allocating its output across segments such that marginal revenue in segment A is $25 and marginal revenue in segment B is $15.How can this firm maximize its profit?

• A)maintain the current output and its allocation across segments
• B)increase the output in segment A and decrease the output in segment B
• C)increase the output in segments A and B
• D)decrease the output in segments A and B
• E)decrease the output in segment A and increase the output in segment B

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Definitions:

Scarce Resources

Resources that are limited in supply and are not available in sufficient quantities to satisfy all the various ways a society wants to use them.

Society

A group of individuals living together in a more or less ordered community with shared laws, traditions, and values.

Economic Profit

The disparity between a company's complete earnings and all its expenses, encompassing both direct and potential costs.

Resource Value

The worth of a resource, based on its utility in producing goods and services or its trade value in the market.