A price-discriminating monopolist sells in two separate markets such that goods sold in one market are never resold in the other.It charges $2 in one market and $12 in the other market.At these prices, the price elasticity in the first market is -2.50 and the price elasticity in the second market is -0.70.Which of the following actions is sure to raise the monopolist's profits? A)Raise p₂. B)Raise both p₁ and p₂. C)Lower p₂. D)Raise p₁ and lower p₂. E)Raise p₂ and lower p₁.

Question

Quizplus · Accepted Answer

The monopolist can raise profits by raising the price in the market with the lower price elasticity of demand.

A Price-Discriminating Monopolist Sells in Two Separate Markets Such That