A monopolist practicing second-degree price discrimination and facing a constant marginal cost:
A)should charge a higher price to the market segment that has the more elastic demand.
B)sets the price schedule according to the number of units purchased by the consumers.
C)need not worry about preventing resale of the product.
D)will supply more output than a perfectly price discriminating monopolist.

Question

Quizplus · Accepted Answer

A monopolist practicing second-degree price discrimination sets different prices for different quantities of the product. The aim is to capture surplus from different segments of customers by offering discounts to those who purchase more. Therefore, the monopolist sets a price schedule based on the number of units purchased by consumers. The other options are not necessarily true in case of second-degree price discrimination.

A Monopolist Practicing Second-Degree Price Discrimination and Facing a Constant