A Monopolist Has Segmented Its Customers into Three Groups,A,B,and C,and

question 57

Multiple Choice

A monopolist has segmented its customers into three groups,A,B,and C,and is discriminating prices between them.Each type A customer has a price elasticity of demand equal to 1.2;each type B customer has a price elasticity of demand equal to 6;and each type C customer has a price elasticity of demand equal to 11.If the firm charges type C customers $11 per unit,what prices should it charge its type A and type B customers in order to maximize profit?

• A)Type A = $1.20 per unit and type B = $6.00 per unit
• B)Type A = $1.33 per unit and type B = $1.66 per unit
• C)Type A = $12.00 per unit and type B = $6.00 per unit
• D)Type A = $60.00 per unit and type B = $12.00 per unit

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Definitions:

Improve Profitability

Involves strategies and actions aimed at increasing the net income relative to revenue, effectively enhancing the financial performance of a business.

Profitability

A measure of the efficiency of a company in generating profits from its operations, calculated as the ratio of net income to revenue.

Sourcing

The process involved in finding, evaluating, and engaging suppliers of goods and services.

Mineralized Salts

Inorganic substances, primarily calcium and phosphate, deposited in the matrix of bone and teeth, giving them hardness and rigidity.