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

question 2

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 $8 in the other market. At these prices, the price elasticity in the first market is -2.40 and the price elasticity in the second market is -0.70. Which of the following actions is sure to raise the monopolist's profits?

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

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Definitions:

Intra-Party Bargaining

The process of negotiation and decision-making within a single political party or group, especially regarding policies or leadership positions.

Public Sector Workers

Employees who work for government or governmental agencies, as opposed to the private sector.

Unify

To bring together or combine into a single unit or entity for a common purpose.

Unilateral Changes

Actions taken independently by an employer affecting employment terms or conditions without consultation with or agreement from the union or employees, often considered an unfair labor practice.