Suppose that a price-discriminating monopolist divides its market into two segments.In each market segment, price is determined by finding the level of output where that market's
A)average revenue equals average total cost
B)average revenue equals average variable cost
C)marginal revenue equals average total cost
D)marginal revenue equals marginal cost
E)marginal cost equals average total cost

Question

Quizplus · Accepted Answer

In order to maximize profit, the monopolist must produce at the level of output where marginal revenue equals marginal cost in each market segment. This is the rule for profit maximization for all monopolists, regardless of whether they price discriminate or not.

Suppose That a Price-Discriminating Monopolist Divides Its Market into Two