If an ordinary price discrimination monopolist charges a higher price in one market than another, it must mean that at the profit- maximising level of output in each market the:
A)monopolist is implementing perfect price discrimination.
B)price- elasticity of demand is higher in the high- price market.
C)price- elasticity of demand is lower in the high- price market.
D)reservation prices are generally higher in the high- price market.

Question

Quizplus · Accepted Answer

If the monopolist charges a higher price in one market than another, it means that demand in the high-price market is less elastic than in the low-price market. This implies that consumers in the high-price market are less responsive to changes in price, meaning their price elasticity of demand is lower. Therefore, choice C, "price-elasticity of demand is lower in the high-price market," is the correct answer. Neither A nor D are correct because the monopolist is not implementing perfect price discrimination and reservation prices are not necessarily higher in the high-price market.

If an Ordinary Price Discrimination Monopolist Charges a Higher Price