Consider a Monopolist That Is Able to Distinguish Between Two

question 6

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

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Definitions:

Bilateral Contract

A type of contract that involves mutual obligations, where each party to the contract is both a promisor and promisee.

Breach of Contract

Occurs when one party fails to fulfill their obligations under a contract, allowing the other party to seek legal remedies.

Valid Offer

A proposal made by one party to another with terms clear enough to create a legally binding contract if accepted.