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

question 13

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 -2.10 and the price elasticity in the second market is -0.40.Which of the following actions is sure to raise the monopolist's profits?

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

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Definitions:

Quantity Control

Regulatory measures or policies aimed at limiting the amount of goods produced, supplied, or available in a market.

Lower Limit

The smallest value that a given set, statistical sample, or data category can take on or be assigned.

Upper Limit

The maximum level or value that can be reached or is allowable in a given context.

Supply and Demand

Fundamental economic model describing how prices vary as a result of a balance between product availability and consumer demand.