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A discriminating monopolist will charge a higher price in the market in which the demand for its product is
  • a)
    Highly elastic
  • b)
    Relatively elastic
  • c)
    Relatively inelastic
  • d)
    Perfectly elastic
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
A discriminating monopolist will charge a higher price in the market i...
Discriminating Monopolist and Price Discrimination
A discriminating monopolist is a market situation where a monopolist charges different prices for the same product in different markets. This is known as price discrimination. Price discrimination is a strategy used by firms to increase their profits by charging different prices to different groups of consumers based on their willingness to pay.

Inelastic Demand
Demand elasticity refers to the responsiveness of demand to changes in price. If demand is relatively inelastic, it means that consumers are not very responsive to changes in price, and as a result, the monopolist can charge a higher price without losing too many customers. This is because consumers who have a relatively inelastic demand for a product are willing to pay more for it, and are less likely to switch to a substitute product if the price increases.

Higher Price
Therefore, a discriminating monopolist will charge a higher price in the market in which the demand for its product is relatively inelastic. This allows the monopolist to increase its profits without losing a significant number of customers to competitors. On the other hand, if the demand for a product is highly elastic, the monopolist cannot charge a higher price as consumers will switch to substitute products if the price increases.

Conclusion
In conclusion, a discriminating monopolist will charge a higher price in markets where the demand for its product is relatively inelastic, and a lower price in markets where the demand for its product is relatively elastic. This allows the monopolist to maximize its profits by charging different prices to different groups of consumers based on their willingness to pay.
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A discriminating monopolist will charge a higher price in the market i...
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A discriminating monopolist will charge a higher price in the market in which the demand for its product isa)Highly elasticb)Relatively elasticc)Relatively inelasticd)Perfectly elasticCorrect answer is option 'C'. Can you explain this answer?
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