A group price discriminator sells its product in Florida for ...

[stevenposner]

A group price discriminator sells its product in Florida for three times the price it sets in New York. Assuming the firm faces the same constant marginal cost in each market and the price elasticity of demand in New York is -2.0, the demand in Florida
 
  A) has an elasticity of -6.0.
  B) is more price elastic than the demand in New York.
  C) has an elasticity of -1.2.
  D) has an elasticity of -0.67.

Question 2

If two identifiable markets differ with respect to their price elasticity of demand and resale is impossible, a firm with market power will
 
  A) set a higher price in the market that is more price elastic.
  B) set a lower price in the market that is more price elastic.
  C) set price so as to equate the elasticity of demand across markets.
  D) set price equal to marginal cost in both markets.

[mathjasmine]

Answer to Question 1

C

Answer to Question 2

B