Wireless service differently in the two market segments

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Reference no: EM131090458

The EarthCom Company prices its wireless service differently in the two market segments it serves even though the cost of adding a new customer is the same in each segment. Market research has shown that EarthCom can increase its profits by price-discriminating, rather than charging the same price to all customers. Currently, the extra revenue that EarthCom obtains from a monthly subscription is $25 in market one and $15 in market two. (Note that these figures are marginal revenues, not prices.) Which of the following statements is most likely correct?

A. From the information provided, we can't determine whether EarthCom's pricing policy is maximizing its profits.

B. EarthCom's price-discrimination policy is not maximizing EarthCom's profits.

C. EarthCom's price-discrimination policy is probably maximizing its profits.

Reference no: EM131090458

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