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

question 1

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:

Delivery Expense

Costs incurred by a company to transport its products to customers, including freight, shipping, and handling fees.

Trade Discounts

Reductions in the listed price of goods or services offered to customers, usually based on volume purchased or early payment.

Customer Discount

A reduction in the price offered to customers, often as an incentive for early payment or as part of promotional efforts.

Sales Tax

A tax imposed by governments on the sale of goods and services, collected by the retailer at the point of purchase.