A Monopolist Sells a Homogeneous Good in Several Distinct Submarkets

question 68

Multiple Choice

A monopolist sells a homogeneous good in several distinct submarkets, and the elasticities of demand differ in these submarkets. If the monopolist selects the rate of output to sell in each submarket by equating marginal revenue and marginal cost, then

• A) all customers in all markets end up paying the same price.
• B) it is not price discriminating, but merely price differentiating.
• C) customers in markets with more elastic demand will pay higher prices than customers in markets with less elastic demand.
• D) customers in markets with more elastic demand will pay lower prices than customers in markets with less elastic demand.

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