What is a rational pricing strategy for a profit-maximizing monopolist
A)price discrimination
B)price differentiation
C)socially optimal pricing
D)average cost pricing

Question

Quizplus · Accepted Answer

Price discrimination is a rational pricing strategy for a profit-maximizing monopolist because it allows the monopolist to charge different prices to different customers based on their willingness to pay. This allows the monopolist to capture a larger portion of the consumer surplus, increasing profits. Price differentiation (B) refers to offering different product variations at different prices, which may not be feasible for a monopolist. Socially optimal pricing (C) focuses on setting prices that maximize societal welfare, which may not align with profit maximization for a monopolist. Average cost pricing (D) sets prices based on the average cost of production, which may not be ideal for a monopolist seeking to maximize profits.

What Is a Rational Pricing Strategy for a Profit-Maximizing Monopolist