Exhibit 9-20 In Exhibit 9-20, a price discriminating monopolist will charge what price?

Question

Exhibit 9-20  In Exhibit 9-20, a price discriminating monopolist will charge what price?

Quizplus · Accepted Answer

In order to maximize profits, the price-discriminating monopolist will charge a higher price to segment B, where the demand is more elastic. The highest price that segment B is willing to pay is P2. In segment A, the monopolist will charge the highest price that consumers are willing to pay, which is PS1U1B11. Therefore, the monopolist will charge PS1U1B11 in segment A and P2 in segment B.

Exhibit 9-20 in Exhibit 9-20, a Price Discriminating Monopolist