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

question 11

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 p₁ = $5 in one market and p₂ = $10 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 -0.10.Which of the following actions is sure to raise the monopolist's profits?

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

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Definitions:

Wilcoxon Signed Rank Test

A nonparametric statistical hypothesis test used when comparing two related samples or repeated measurements on a single sample to assess whether their population mean ranks differ.

Tied Values

Occur when two or more entities in a dataset have the same value on a particular measure.

Ranks

The ordinal positions of values in a dataset, arranged in ascending or descending order.

Kruskal-Wallis Test

A nonparametric statistical test used to compare three or more independent groups of sampled data to determine if there is a difference in their medians.