Suppose That a Price Discriminating Monopolist Is Able to Divide

question 98

Multiple Choice

Suppose that a price discriminating monopolist is able to divide its market into two groups. If the firm sells its product for $25 to the group whose customers have the least elastic demand, what price are they likely to charge to the group whose customers have the most elastic demand?

• A) $25
• B) more than $25
• C) less than $25
• D) The answer depends on the marginal revenue for that group.

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Definitions:

Fontanels

Soft spots in an infant’s skull that consist of tough membranes that connect to incompletely developed bone.

Skull

The bony structure forming the head, housing the brain and providing protection to it.

Spongy Bones

A type of bone tissue characterized by a porous, honeycomb-like structure, found primarily at the ends of long bones and in the interior of vertebrae, playing a key role in movement and support.

Endosteum

A membrane that lines the medullary cavity and the holes of spongy bone.