In Table 24.1, using the profit maximization rule, a monopolist that is able to practice price discrimination will charge
A) A price of $450.
B) A price of $400.
C) A price of $500.
D) Different prices to different customers.

Question

In Table 24.1, using the profit maximization rule, a monopolist that is able to practice price discrimination will charge
A) A price of $450. 
B) A price of $400. 
C) A price of $500. 
D) Different prices to different customers.

Quizplus · Accepted Answer

The profit maximizing rule states that a monopolist should produce where marginal revenue equals marginal cost. However, when a monopolist can practice price discrimination, it can charge different prices to different customers based on their willingness to pay. Therefore, the monopolist in Table 24.1 would charge different prices to different customers rather than a single price of $450, $400, or $500.