A Monopolist Is Able to Practice Third-Degree Price Discrimination Between

question 6

Multiple Choice

A monopolist is able to practice third-degree price discrimination between two markets.The demand function in the first market is q = 500 - 2p and the demand function in the second market is q = 1,500 - 6p.To maximize his profits, he should

• A)charge a higher price in the second market than in the first.
• B)charge a higher price in the first market than in the second.
• C)charge the same price in both markets.
• D)sell only in one of the two markets.
• E)None of the above.

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Definitions:

Notes Payable

A formal written agreement in which one party agrees to pay another a specific sum of money, either on demand or at a determined future date.

Interest-Bearing Note

A debt instrument that pays interest to the holder until its maturity date.

Issuance of Note

The act of creating a promissory note by which a borrower agrees to pay back a lender according to set terms.

Discounted Note

A promissory note whose proceeds are less than its face value due to interest being deducted in advance.