Question

Suppose the monopolist is able to price discriminate between two groups successfully by charging one group 75 and charging 35 to the other group. What is the difference in price between the two groups?

1) 40
2) 35
3) 75
4) Cannot be determined

Answer 1

The difference in price charged by a monopolist to two different groups is 40.

Step-by-step explanation:

If a monopolist is charging one group 75 and another group 35, the difference in price between the two groups is simply 75 minus 35, which equals 40. Therefore, the price difference between the two groups is 40. The tactic of offering the same good or service to various clients at varying prices is known as price discrimination. Selling a product at the precise price that each consumer is willing to pay is known as first-degree price discrimination.