If the monopolist practices price discrimination

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Reference no: EM13837931

1a) The XYZ Company is a profit-maximizing firm with a monopoly in the production of UIC sweatshirts. The firm sells UIC sweatshirts for $25 each. We can conclude, therefore, that XYZ Company is producing at a level of output at which:

A. average total cost is equal to $25

B. average total cost is greater than $25

C. marginal revenue is equal to $25

D. marginal revenue is equal to marginal cost

1b) suppose a monopolist can separate its customers into two groups. If the monopolist practices price discrimination, it will charge the lower price to the group with:

A. the higher price elasticity of demand (e.g., -1.5 is higher than -0.8)

B. the lower price elasticity of demand (e.g., -0.8 is lower than -1.5)

C. the fewest close substitutes

D. the greatest need for the product or service

E. the answer cannot be determined with the information given

Reference no: EM13837931

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