In Exhibit 918, a price discriminating monopolist will charge what price?

Question

In Exhibit 9­18, a price discriminating monopolist will charge what price?

Quizplus · Accepted Answer

The price discriminating monopolist will charge a different price in each segment based on the demand in that segment. In segment A, the demand curve intersects the marginal cost curve at point U1, so the monopolist will charge the highest price possible in that segment, which is PS1. In segment B, the demand curve intersects the marginal cost curve at point U2, so the monopolist will charge the highest price possible in that segment, which is PS2. Therefore, in segment A, the price charged will be P₁, and in segment B, the price charged will be P₂. The best choice that reflects this is D.

In Exhibit 9­18, a Price Discriminating Monopolist Will Charge What

In Exhibit 918, a Price Discriminating Monopolist Will Charge What