Suppose that a price-discriminating monopolist divides its market into two segments.The firm will charge the lower price in the market segment where consumers
A)have relatively less elastic demand
B)have relatively more elastic demand
C)attach a higher marginal value to each unit of the good
D)have perfectly inelastic demand
E)attach higher average value to units of the good

Question

Quizplus · Accepted Answer

A price-discriminating monopolist charges a lower price in the market segment where consumers have relatively more elastic demand because these consumers are more sensitive to price changes, and a lower price will increase the quantity demanded in this segment.

Suppose That a Price-Discriminating Monopolist Divides Its Market into Two