A Monopolist Sells a Homogeneous Good in Several Distinct Submarkets

question 68

Multiple Choice

A monopolist sells a homogeneous good in several distinct submarkets, and the elasticities of demand differ in these submarkets. If the monopolist selects the rate of output to sell in each submarket by equating marginal revenue and marginal cost, then

• A) all customers in all markets end up paying the same price.
• B) it is not price discriminating, but merely price differentiating.
• C) customers in markets with more elastic demand will pay higher prices than customers in markets with less elastic demand.
• D) customers in markets with more elastic demand will pay lower prices than customers in markets with less elastic demand.

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Definitions:

Investment

Investment involves allocating resources, usually financial assets, with the expectation of generating an income or profit over time.

Interest Rate

The fee, represented as a percentage of the principal amount, levied by a lender on a borrower for the utilization of assets.

Yield Income

Income generated from investments that pay out returns, such as dividends from stocks or interest from bonds.

Investment Project

An initiative to allocate resources with the expectation of achieving future returns.