Consider a Monopolist That Is Able to Distinguish Between Two

question 104

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 $100 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 $85 and marginal revenue in segment B is $105. How can this firm maximize its profit?

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