A Price-Discriminating Monopolist Sells in Two Separate Markets Such That

question 18

Multiple Choice

A price-discriminating monopolist sells in two separate markets such that goods sold in one market are never resold in the other. It charges $6 in one market and $11 in the other market. At these prices, the price elasticity in the first market is -1.40 and the price elasticity in the second market is -0.90. Which of the following actions is sure to raise the monopolist's profits?

• A) Lower p₂.
• B) Raise p₁ and lower p₂.
• C) Raise p₂.
• D) Raise both p₁ and p₂.
• E) Raise p₂ and lower p₁.

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Definitions:

Imc Channel

The use of various promotional tools in a coordinated manner to reinforce the marketing message in integrated marketing communications.

Coupons Rebates

Incentives offered to consumers as a form of discount on goods or services, where coupons provide immediate reductions and rebates require submission for a refund post-purchase.

Personal Selling

A direct marketing approach involving face-to-face interaction between a salesperson and a customer to present products or services.

Two-Way Flow

describes a communication or process that involves reciprocal action or exchange between two parties or systems.