Suppose a profit-maximizing monopoly is able to employ group price discriminatio

Question

Suppose a profit-maximizing monopoly is able to employ group price discrimination. The marginal cost of providing the good is constant and the same in both markets. The marginal revenue the firm earns on the fat unit sold in the market with the lower price will be equal to the marginal revenue the firm earns on the last unit sold in the market with the higher price. Greater than the marginal revenue the firm earns on the unit sold in the market with the h9igher price. Less than the marginal revenue the firm earns on the last unit sold in the market with the higher price. Greater than the marginal cost of the last unit.

Explanation / Answer

c. lower than the marginal revenue the firm earns on the last unit sold in the market with higher price.

As firms does price discrimination when two groups have different demand and hence different marginal revenue.

So in market with lower MR, equilibrium will be at MR = MC. and MR will be less than MR in case of highr price.

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