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Haley Breeden
on Dec 01, 2024

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A price-discriminating monopolist sells in two separate markets such that goods sold in one market are never resold in the other.It charges $4 in one market and $9 in the other market.At these prices, the price elasticity in the first market is -1.50 and the price elasticity in the second market -0.40.Which of the following actions is sure to raise the monopolist's profits?

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

Price-discriminating Monopolist

A monopolist that sells the same product at different prices to different groups of consumers, usually to maximize profits by capturing consumer surplus.

Market

A place or mechanism through which buyers and sellers interact to trade goods, services, or assets, facilitating the determination of prices and the exchange of ownership.

Price Elasticity

An indicator of the sensitivity of consumer demand for a product to variations in its price, reflecting how significantly the amount of the product consumers want to buy alters with price adjustments.

  • Acquire insight into the concept of price discrimination and its repercussions on monopoly earnings.
  • Examine the role of elasticity in determining pricing approaches.
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Adila FayaziDec 01, 2024
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