The monopolist's profit-maximizing price is $25 per unit and his marginal cost is $13.Consumers exist with reservation prices between $24 and $13 per unit.The monopolist is
A) uninterested in the desires of these consumers.
B) unwilling to sell to these consumers under any circumstance.
C) willing to sell to these consumers at less than $25 per unit if his original customers continue to pay $25 per unit.
D) willing to lower the price to everyone.
E) worse off if he charges lower prices to these consumers while maintaining the higher price to the original consumers.

Question

Quizplus · Accepted Answer

The monopolist has no incentive to lower the price to everyone because he is currently maximizing his profits at $25 per unit. However, if he is able to sell to additional customers with reservation prices between $24 and $13 per unit, he can increase his profits by lowering the price for these consumers while maintaining the higher price for the original customers. This is known as price discrimination and is a common strategy used by monopolists. Therefore, the monopolist is willing to sell to these consumers at less than $25 per unit if his original customers continue to pay $25 per unit.

The Monopolist's Profit-Maximizing Price Is $25 Per Unit and His