Suppose group price discrimination is possible; however,a firm sets the same price in each market.As a result,
A) price elasticity of demand is the same in each market.
B) the price-inelastic market will buy zero units.
C) marginal revenue in the more price-elastic market exceeds marginal revenue in the less price-elastic market.
D) the deadweight loss is less than if the firm price discriminated.

Question

Quizplus · Accepted Answer

Marginal revenue in the more price-elastic market exceeds marginal revenue in the less price-elastic market because, with a single price, the firm is not able to perfectly extract consumer surplus in each market. In the more elastic market, consumers are more sensitive to price changes, so a lower price would increase quantity sold significantly, leading to higher marginal revenue compared to the less elastic market.

Suppose Group Price Discrimination Is Possible; However,a Firm Sets the Same