For a monopolist that engages in price discrimination,when the price elasticity in market 1 is less (in absolute value)than in market 2,the optimal price in market 1 will exceed the optimal price in market 2.

Question

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When the price elasticity is less (in absolute value), it means that consumers in that market are less sensitive to changes in price, and the monopolist can charge a higher price without losing too many customers. Therefore, the monopolist will set a higher price in market 1 where the demand is less elastic, compared to market 2 where the demand is more elastic. This is the basic principle of price discrimination based on willingness to pay.

For a Monopolist That Engages in Price Discrimination,when the Price