Question

A price-discriminating monopolist having identical costs in two markets should charge a higher price in that market Group of answer choices

Answer 1

Complete Question:

A price-discriminating monopolist having identical costs in two markets should charge a higher price in that market:

Group of answer choices.

A. which has a higher demand.

B. which has a more elastic demand.

C. which has a less elastic demand.

D. which has a higher marginal revenue.

Answer:

C. which has a less elastic demand.

Explanation:

In competitive marketing, a price-discriminating monopolist is any individual or business entity which charges various customers different prices for its finished products or services, even though the products are similar, identical or homogeneous in nature and there cost of production is the same.

A price-discriminating monopolist having identical costs in two markets should charge a higher price in that market which has a less elastic demand because there are no close substitutes or alternatives for the goods and services.

For instance, if there's a gasoline or fuel hike in a particular state, a price-discriminating monopolist would charge higher price because gasoline or fuel is inelastic in the short-run or has a less elastic demand at the time.