The Figure Given Below Shows the Demand Curves of Two

question 78

Multiple Choice

The figure given below shows the demand curves of two classes of buyers for tickets to a football match. Figure 10.4 D₁: Demand curve of group 1
D₂: Demand curve of group 2
MR₁: Marginal revenue of group 1
MR₂: Marginal revenue of group 2
MC: Marginal cost
Refer to Figure 10.4.What price must be charged to both the groups to maximize profits?

• A)P₁
• B)P₂
• C)Group 1 must be charged P₁ and group 2 must be charged P₂.
• D)Group 1 must be charged P₂ and group 2 must be charged P₁.
• E)Both the groups must be charged a price that is equal to the marginal cost.

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Definitions:

Price Stability

A situation in an economy where prices in general do not change significantly over time, minimizing uncertainty and conducive to economic growth.

Oligopolies

Market structures characterized by a small number of firms that have significant market power, which can influence prices and output levels.

Cartels

Formal agreements among competing firms to control prices, production, and distribution of goods, often to restrict competition and increase profits illegally.

Collusive Arrangements

Agreements between firms to control prices or exclude entry of a new competitor in the market, often in violation of antitrust laws.