If different markets for a product produced by a monopolist can be separated and if the elasticity of demand differs between the two markets, then the monopolist will
A) be able to make higher profits by using price discrimination.
B) charge a single price in all markets.
C) go out of business.
D) sell the product in only one of the markets with inelastic demand curves.

Question

Quizplus · Accepted Answer

If the monopolist can identify separate markets with different elasticities of demand, they can charge a higher price to the market with lower elasticity of demand, and a lower price to the market with higher elasticity of demand. This strategy is known as price discrimination and can lead to increased profits for the monopolist.

If Different Markets for a Product Produced by a Monopolist