The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 24.4
Refer to Table 24.4.If marginal cost is $30 in both markets, what quantities will be supplied in each of the markets?

Question

The following table shows the marginal revenues earned by a price discriminating monopolist from two different markets. Table 24.4
 Refer to Table 24.4.If marginal cost is $30 in both markets, what quantities will be supplied in each of the markets?

Quizplus · Accepted Answer

In a monopolistic price discrimination setup, the monopolist produces in the market where marginal revenue equals marginal cost. In market X, at a quantity of 3, marginal revenue equals $30, which is the marginal cost, and hence 3 units should be supplied in market X. Similarly, in market Y, at a quantity of 3, marginal revenue equals $30, which is the marginal cost, and hence 3 units should be supplied in market Y. Therefore, the best choice is D) 3 units in market X;3 units in market Y.

The Following Table Shows the Marginal Revenues Earned by a Price