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

question 10

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 -2.10 and the price elasticity in the second market is -0.40. Which of the following actions is sure to raise the monopolist's profits?

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

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Definitions:

Puberty

The period during which adolescents undergo physical and hormonal changes that lead to sexual maturity.

Sexual Activity

Behaviors relating to the act of sexual intercourse or other forms of sexual expression between individuals.

Invincibility Fable

A cognitive bias often observed in adolescents who believe they are immune to common dangers, leading to risky behaviors.

Deductive Reasoning

An approach to reasoning where the outcome is derived by the alignment of various premises assumed to be accurate.