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

question 3

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:

Cognitive Restructuring

A psychotherapeutic process of learning to identify and dispute irrational or maladaptive thoughts, often used in cognitive-behavioral therapy.

Counterconditioning

A behavioral therapy technique involving the pairing of an unwanted behavior or response with a new, desired stimulus to condition a more favorable response.

Catharsis

The process of releasing, and thereby providing relief from, strong or repressed emotions through articulation or activity.

Consciousness Raising

The process of increasing awareness about social, political, or personal issues or inequities, often with the goal of inducing change.