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Questions › JNU › JNU SIS 2018 › Q17
2 marks, −1Microeconomics › Monopoly and price discrimination › Third-degree price discriminationModerateabout 2 min

JNU SIS 2018 Question 17: Monopoly and price discrimination

A discriminating monopolist sells the same good in two segregated markets, Market 1 and Market 2. Denote the prices of the good in the two markets by P1P_1P1​ and P2P_2P2​. Denote the price elasticities of demand for the good in the two markets by e1e_1e1​ and e2e_2e2​. Now, suppose that the price in Market 2 is double the price in Market 1. Which of the following are possible values of e1e_1e1​ and e2e_2e2​?

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Plain-text version

A discriminating monopolist sells the same good in two segregated markets, Market 1 and Market 2. Denote the prices of the good in the two markets by P₁ and P₂. Denote the price elasticities of demand for the good in the two markets by e₁ and e₂. Now, suppose that the price in Market 2 is double the price in Market 1. Which of the following are possible values of e₁ and e₂? (A) e₁ = 1/2, e₂ = 2/3 (B) e₁ = 2, e₂ = 1 (C) e₁ = 2, e₂ = 4/3 (D) e₁ = 3, e₂ = 2

Also written as: A discriminating monopolist sells the same good in two segregated markets, Market 1 and Market 2. Denote the prices of the good in the two markets by P_1 and P_2. Denote the price elasticities of demand for the good in the two markets by e_1 and e_2. Now, suppose that the price in Market 2 is double the price in Market 1. Which of the following are possible values of e_1 and e_2?

Monopoly and price discrimination has come up 128 times in 7 exams since 2004.

What this question tests

This question is on Third-degree price discrimination, part of Monopoly and price discrimination in Microeconomics.

Charging different groups different prices, and how elasticities decide which group pays more.

TestStop has 14 past-paper questions on this subtopic.

Practise Monopoly and price discriminationMore on Third-degree price discrimination

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Question from the JNU SIS 2018 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.