In which market should price be higher

Reference no: EM131481703

Question: If a monopolist can operate price discrimination and charge separate prices P1 and P2 in two different markets, it can be proved that for profit maximization the monopolist should choose values for P1 and P2 that satisfy the equation

where e1 and e2 are elasticities of demand in the two markets. In which market should price be higher if |e1| > |e2|?

Reference no: EM131481703

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