CA Foundation P4 · Chapter 4 · Question 8 of 15
Under third-degree price discrimination, a profit-maximising monopolist will charge:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) A higher price in the market where demand is less elastic
Explanation
The discriminating monopolist equates MR in each market with overall MC. Since MR = P(1 - 1/e), equal MRs require a higher price where e is lower. Buyers with fewer alternatives (less elastic demand) are charged more.
More Price Determination in Different Markets MCQs
- Q10Product differentiation and selling costs are distinguishing features of:
- Q11In long-run equilibrium under monopolistic competition, the firm:
- Q12The kinked demand curve model of oligopoly is used mainly to explain:
- Q13The most distinctive feature of an oligopoly is:
- Q14A formal agreement among oligopolistic firms to fix prices or share output, in order to act like a monopoly, is called: