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

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Definitions:

Information Register

The capacity for storing information temporarily in the mind, playing a critical role in decision-making and other cognitive processes.

Memory

The ability of the mind to store and recall information, experiences, images, or sensations.

Sensed

Perceived or felt through any of the senses, such as sight, hearing, touch, taste, or smell, often implying a degree of intuition or awareness.

Muscle Tremors

Involuntary, rhythmic muscle contractions leading to shaking movements in one or more parts of the body.