If a price-discriminating monopolist sells the same product in two markets but charges a higher price in market X and a lower price in market Y, the pricing difference indicates that demand is
A) more elastic in market X than in market Y.
B) less elastic in market X than in market Y.
C) less elastic in market Y than in market X.
D) the same in both markets X and Y.

Question

Quizplus · Accepted Answer

A monopolist charges a higher price in a market where demand is less elastic because consumers are less sensitive to price changes, allowing the monopolist to maximize profits by setting a higher price.

If a Price-Discriminating Monopolist Sells the Same Product in Two