If the price elasticity of demand for U.S. automobiles is higher in Europe than it is in the United States, and transport costs are zero, a price-discriminating monopolist would charge
A) the same price for autos in the United States as in Europe.
B) a lower price for autos in the United States than in Europe.
C) a higher price for autos in the United States than in Europe.
D) a less profitable price for autos in the United States than in Europe.

Question

Quizplus · Accepted Answer

A price-discriminating monopolist charges a higher price in markets with lower price elasticity of demand. Since demand is more elastic in Europe, the monopolist would charge a higher price in the U.S. where demand is less elastic.

If the Price Elasticity of Demand for U