Completed as soon as possible thank u Suppose there is a firm with at least some market power that supplies the same product to two markets. Price elasticity of demand has been calculated and differs across the two markets. Marginal cost is the same for supplying both markets. Should they price discriminate? а. No, they should set price below marginal cost. b. Yes, they should charge a higher price in the market where price elasticity of demand is less elastic (i.e. a lower absolute value of elasticity). С. No, they should set price equal to marginal cost. d. No, they should set price equal to marginal cost. d. Yes, they should charge a higher price in the market where price elasticity of demand is more elastic (i.e. a larger absolute value of elasticity).
Completed as soon as possible thank u Suppose there is a firm with at least some market power that supplies the same product to two markets. Price elasticity of demand has been calculated and differs across the two markets. Marginal cost is the same for supplying both markets. Should they price discriminate? а. No, they should set price below marginal cost. b. Yes, they should charge a higher price in the market where price elasticity of demand is less elastic (i.e. a lower absolute value of elasticity). С. No, they should set price equal to marginal cost. d. No, they should set price equal to marginal cost. d. Yes, they should charge a higher price in the market where price elasticity of demand is more elastic (i.e. a larger absolute value of elasticity).
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Completed as soon as possible thank u
Suppose there is a firm with at least some
market power that supplies the same
product to two markets. Price elasticity of
demand has been calculated and differs
across the two markets. Marginal cost is the
same for supplying both markets. Should
they price discriminate?
а.
No, they should set price below marginal
cost.
b.
Yes, they should charge a higher price in
the market where price elasticity of demand
is less elastic (i.e. a lower absolute value of
elasticity).
С.
No, they should set price equal to marginal
cost.
d.
No, they should set price equal to marginal
cost.
d.
Yes, they should charge a higher price in
the market where price elasticity of demand
is more elastic (i.e. a larger absolute value of
elasticity).
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