Ask Question
BusinessBusiness
13 January, 17:42

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

+1
Answers (1)
  1. 13 January, 18:56
    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?
Get 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 there is no answer or all answers are wrong, use a search bar and try to find the answer among similar questions.
Search for Other Answers
You Might be Interested in
When a seller advertises goods for sale on a web site, that seller is making an offer to potential buyers. a. True b. False?
Answers (1)
Kunkel, applebaum, and nelson focus on which type of financial support for caregivers?
Answers (1)
Which of the following is an ad hominem fallacy? Select one: a. Other brands of toothpaste might promise you "dazzling white teeth," but those corporations are deceiving you. Only Lima Bean Green Toothpaste will give you the smile you desire. b.
Answers (1)
In Fairlawn, there are $5000$ households with an average of $2.26$ people per household. Of these households, $1400$ are single-person households and the rest are multiple-person households.
Answers (2)
On January 1, 2021, a company issues $800,000 of 8% bonds, due in ten years, with interest payable semi annually on June 30 and December 31 each year. Assuming the market interest rate on the issue date is 7%, the bonds will issue at $856,850.
Answers (1)
New Questions in Business
Used to access a list of sales and expense transactions A customer in the Sample Company A vendor in the Sample Company Matching a banking transaction with a QBO transaction Bank deposits not yet recognized Bank charges not yet recognized Exist for
Answers (1)
A company expects the following sales for the coming year: 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Units 50,000 40,000 70,000 90,000 Average selling price $6 $6 $6 $8 Budgeted sales revenue for the year is: a.$1,050,000. b.
Answers (1)
Tangshan China Company's stock is currently selling for $80.00 per share. The expected dividend one year from now is $4.00 and the required return is 13 percent.
Answers (1)
18. What was a major factor in the failure of (mostly) command economies? A. Lack of voting rights B. Lack of the profit motive C. Not enough military spending D. Abundant basic goods
Answers (2)
You are saving to buy a $188,000 house. There are two competing banks in your area, both offering certificates of deposit yielding 7.3 percent.
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?