If Two Identifiable Markets Differ with Respect to Their Price

question 16

Multiple Choice

If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible,a firm with market power will

• A) set a higher price in the market that is more price elastic.
• B) set a lower price in the market that is more price elastic.
• C) set price so as to equate the elasticity of demand across markets.
• D) set price equal to marginal cost in both markets.

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Definitions:

Complementary

Referring to goods or services that enhance or add value to each other when used or consumed together.

Demand Curve

A graphical representation showing the relationship between the price of a good or service and the quantity demanded for a given period.

Right Shift

In programming, it refers to an operation that shifts the bits of a binary number to the right, effectively dividing the number by two. In politics, it refers to a move towards more conservative policies.

Monopolistic Competition

A market structure where many companies sell products that are similar but not identical, allowing for competition on factors other than just price, such as branding and quality.