Figure 16-3

Chantal owns a hairdressing salon which caters to two main groups of customers: residents of "The Chateau," a retirement community, and other residents in the neighborhood. Figure 16-3 shows the demand curves for the residents of the retirement community, labeled Market A, and other residents in the neighborhood, labeled Market B. The demand curves are not identical.
-Refer to Figure 16-3.Suppose Chantal charges all her customers a uniform price of $10 for a haircut.Which of the following statements is true?
A)Chantal is selling more than the profit-maximizing quantity of haircuts in market B.
B)Chantal is selling less than the profit-maximizing quantity of haircuts in market B.
C)Chantal is maximizing revenue in market B.
D)Chantal will earn a greater profit through uniform pricing than if she practices price discriminates.

Question

Figure 16-3
  
Chantal owns a hairdressing salon which caters to two main groups of customers: residents of "The Chateau," a retirement community, and other residents in the neighborhood. Figure 16-3 shows the demand curves for the residents of the retirement community, labeled Market A, and other residents in the neighborhood, labeled Market B. The demand curves are not identical.
-Refer to Figure 16-3.Suppose Chantal charges all her customers a uniform price of $10 for a haircut.Which of the following statements is true?
A)Chantal is selling more than the profit-maximizing quantity of haircuts in market B. 
B)Chantal is selling less than the profit-maximizing quantity of haircuts in market B. 
C)Chantal is maximizing revenue in market B. 
D)Chantal will earn a greater profit through uniform pricing than if she practices price discriminates.

Quizplus · Accepted Answer

If Chantal charges a uniform price of $10, she may be selling more than the profit-maximizing quantity in market B if the marginal cost of providing additional haircuts exceeds the marginal revenue at that price.

Figure 16-3 Chantal Owns a Hairdressing Salon Which Caters to Two Main