-Capture regulation is a tool by which incumbent advertise greatly, generate bra

Question

-Capture regulation is a tool by which incumbent advertise greatly, generate brand loyalty (and thereby “capture” customers thus making it difficult for other firms to enter the market.

True or false

-A third-degree price discrimination firm is currently selling its product to two groups of consumers, A&B. The price elasticity on the part of consumer group A equals -3, while the price elasticity on the part of consumer group B equals -2. Accordingly, in order to increase profit ,this firm should:

A. Increase sales to groups A and decease sales to group B

B. Decrease sales to group A and increase sales to group B

C. Maintain sales at current levels

D. all of the above are possible, as not enough information is provided to determine the optimal allocation of sales across the two groups

Explanation / Answer

1)true 2) maintain sales at current level

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