PRC-3 · Chapter 12 · Question 69 of 69
A monopolist attempts to boost profits by using 'Price Discrimination' (charging different prices in two distinct cities). This strategy will be entirely impossible or unprofitable if:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) The two cities have the exact same price elasticity of demand
Explanation
Price discrimination relies on consumers having different sensitivities to price. If both markets react identically, altering prices yields no comparative revenue advantage.
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