Question

If the price elasticity of demand for U.S. automobiles is higher in Europe than it is in the United States, and transport costs are zero, a price-discriminating monopolist would charge:__________.
a. a less profitable price for autos in the United States than in Europe.
b. a lower price for autos in the United States than in Europe.
c. the same price for autos in the United States as in Europe.
d. a higher price for autos in the United States than in Europe.

Answer 1

Answer:

d. a higher price for autos in the United States than in Europe.

Explanation:

As it is mentioned that the price elasticity of demand in more in Europe as compared with the United States that represents a slight increase in price would decline the immense demand in Europe

Plus the elasticity in the united states is not high that reflects that change in price have a less impact on quantity demanded

Therefore the option d is correct