Consider a Monopolist That Is Able to Distinguish Between Two

question 15

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.Is this firm maximizing its profit?

• A)Yes,because it has set a price such that MC is between the MRs of the two market segments.
• B)No,because it is only possible to equate MR and MC when there is a single MR curve.
• C)Yes,because since marginal cost is constant,the firm must set a single price.
• D)No,this firm can increase its profits by price discriminating across the two market segments.

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Definitions:

Stringent Gatekeeping

The strict and rigorous control or limitation of access to something, often applied to information or resources.

Collaboration Purposes

The goals or objectives that drive the effort of working together in a joint intellectual endeavor.

High Uncertainty

A situation or condition where there is a lack of predictability or knowledge about future outcomes or events.

Devil's Advocate

A person who expresses a contentious opinion in order to provoke debate or test the strength of the opposing arguments.