A Monopolist Is Able to Practice Third-Degree Price Discrimination Between

question 32

Multiple Choice

A monopolist is able to practice third-degree price discrimination between two markets. The demand function in the first market is q = 500 - 2p and the demand function in the second market is q = 1,500 - 6p. To maximize his profits, he should

• A) charge a higher price in the second market than in the first.
• B) charge a higher price in the first market than in the second.
• C) charge the same price in both markets.
• D) sell only in one of the two markets.
• E) None of the above.

---

Definitions:

Absolute Advantage

The ability of an individual, company, or country to produce a good or service more efficiently than competitors, using fewer resources.

Lumber

Lumber that has been manufactured into planks and beams, marking a step in the journey of producing wood products.

Comparative Advantage

The ability of an individual, company, or country to produce a particular good or service at a lower opportunity cost than others.

Copper Ore

A natural mineral formation containing copper in sufficient concentration to make its economic extraction feasible.