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Author Question: Consider a monopolist that is able to distinguish between two distinct market segments, A and B, for ... (Read 44 times)

tspaw0811

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Consider a monopolist that is able to distinguish between two distinct market segments, A and B, for its product. Marginal cost is constant at $100 for each unit produced. The firm is currently selling its output at a single price and allocating its output across segments such that marginal revenue in segment A is $85 and marginal revenue in segment B is $105. Is this firm maximizing its profit?
◦ No, because it is only possible to equate MR and MC when there is a single MR curve.
◦ Yes, because it has set a price such that MC is between the MRs of the two market segments.
◦ No, this firm can increase its profits by price discriminating across the two market segments.
◦ Yes, because since marginal cost is constant, the firm must set a single price.


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Marked as best answer by tspaw0811 on Oct 12, 2022

jojo120419

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tspaw0811

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Reply 2 on: Oct 12, 2022
Thanks for the timely response, appreciate it


jomama

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Reply 3 on: Yesterday
Excellent

 

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