Consider a Monopolist That Is Able to Distinguish Between Two

question 15

Multiple Choice

Consider a monopolist that is able to distinguish between two distinct market segments,A and B,for its product.Marginal cost is constant at $18 for each unit produced.The firm is currently selling its output at a single price and allocating its output across segments such that marginal revenue in segment A is $25 and marginal revenue in segment B is $15.Is this firm maximizing its profit?

• A)Yes,because it has set a price such that MC is between the MRs of the two market segments.
• B)No,because it is only possible to equate MR and MC when there is a single MR curve.
• C)Yes,because since marginal cost is constant,the firm must set a single price.
• D)No,this firm can increase its profits by price discriminating across the two market segments.

---

Definitions:

Closed-System Control

An approach to management or control that is self-contained and does not interact with external environments, focusing on internal functioning.

Diagonal Communication

Information exchange that occurs between individuals at different levels and different departments within an organization, bypassing traditional hierarchical structures.

Vertical Control

A management approach where decision-making and directives flow from the top levels of the organizational hierarchy down to the lower levels.

Lateral Command

A form of organizational communication that occurs among colleagues at the same hierarchical level, without involving higher management.