Suppose that a price discriminating monopolist is able to divide its market into two groups. If the firm sells its product for $50 to the group whose customers have the most elastic demand, what price are they likely to charge to the group whose customers have the least elastic demand?
A) $50
B) more than $50
C) less than $50
D) The answer depends on the marginal revenue for that group.

Question

Quizplus · Accepted Answer

The price discriminating monopolist is able to charge a higher price to the group whose customers have the least elastic demand because they are willing to pay more for the product. Therefore, the price for this group is likely to be more than $50.

Suppose That a Price Discriminating Monopolist Is Able to Divide