When a firm is practicing price discrimination in two markets, the profit maximizing condition is met at MR_A = MR_B = SMC.

Question

Quizplus · Accepted Answer

This is the correct profit maximizing condition for a firm practicing price discrimination in two markets. MR_A represents the marginal revenue in market A, and MR_B represents the marginal revenue in market B. SMC represents the marginal cost of producing the good or service. When both markets have the same marginal revenue, that is the point where the firm should produce and sell the good or service.

When a Firm Is Practicing Price Discrimination in Two Markets