When a firm is practicing price discrimination in two markets, the profit maximizing condition is met when marginal cost is equal to marginal revenue in both markets.

Question

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Price discrimination aims to maximize profits by charging different prices in different markets or to different groups of consumers. The profit-maximizing condition under price discrimination is achieved when the marginal cost (MC) of producing the good is equal to the marginal revenue (MR) obtained from each separate market. This ensures that the firm is allocating its resources efficiently across the markets to maximize total profits.

When a Firm Is Practicing Price Discrimination in Two Markets