Ask Question
BusinessBusiness
3 December, 11:14

Consider a monopolist currently selling output Q to two different markets: Market A and Market B. This monopolist is able to price discriminate and charge different prices in these markets. Let QA and PA be the quantity and price in market A, and QB and PB be the quantity and price in market B. The monopolist is optimally choosing its prices and quantities, in order to maximize profit. The monopolist knows the price elasticity of demand in these markets, and knows that market A is more inelastic than market B. Consider each of the following three statements. What do we know for sure?1) Regarding marginal revenues, we must have MRA > MRB 2) Regarding prices, we must have PA > PB 3) Regarding quantities, we must have QA> QB

+2
Answers (1)
  1. 3 December, 11:43
    0
    1. This is true because demand in market A is more inelastic which means demand curve and marginal revenue curve are steeper in this market. at any quantity marginal revenue will be higher in market A than in market B

    2. This is true because market where demand is inelastic have a higher price. This is because revenue is increased when higher price is charged in market with inelastic demand.

    3. This is false/uncertain because when price is higher in market a the quantity will be lower relativity. This is due to the downward sloping demand function in which price is increased quantity will decline.
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Consider a monopolist currently selling output Q to two different markets: Market A and Market B. This monopolist is able to price ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Which one of the following is not considered as material costs? a. Partially completed motor engines for a motorcycle plant b. Bolts used in manufacturing the compressor of an engine c. Rivets for the wings of a new commercial jet aircraft d.
Answers (1)
For which of the following manufactured products would job costing be more appropriate than process costing? Select one: A. Liquid soap B. Paint C. Designer dresses sold to celebrities D. Chemicals
Answers (1)
On December 31, Rivera Company receives a utility bill in the mail for $440. Rivera Company intends to pay the bill in early January of next year.
Answers (1)
Suppose an owner pays $500 million to purchase a hockey team that earns operating profits of $50 million per year.
Answers (1)
In determining why a firm becomes multinational there are many reasons. One reason is that the firm is a market seeker.
Answers (1)
New Questions in Business
It is appropriate to use the fixed assets turnover ratio to appraise firms' effectiveness in managing their fixed assets if and only all the firms being compared have the same proportion of fixed assets to total assets. a) trueb) false
Answers (1)
Which of the following actions differentiates an entrepreneur from other small business owners?
Answers (1)
Mccoo Inc. bases its manufacturing overhead budget on budgeted direct labor-hours. The variable overhead rate is $1.50 per direct labor-hour.
Answers (1)
Which of the following is true of Finished Goods Inventory? A. Finished Goods Inventory is an account used by a manufacturer and includes completed goods that have not yet been sold. B.
Answers (1)
Suppose a three-person comittee is formed for a culb by drawing names out of a hat. If the expected number of women is 2 and there are 10 men in the culb, how many women are in the club?
Answers (1)
Home » Business » Consider a monopolist currently selling output Q to two different markets: Market A and Market B. This monopolist is able to price discriminate and charge different prices in these markets.
Sign Up Forgot Password?