Question

If a price-discriminating pure monopoly sells the same product in two markets but charges a higher price in market X and a lower price in market Y, the pricing difference indicates that demand is

Multiple Choice
A. relatively more elastic in market X than market Y.
B. relatively less elastic in market X than market Y.
C. relatively less elastic in market Y than market X.
D. the same in both market X and Y.

Answer 1

The pricing difference indicates that demand is more elastic in market X than market Y.

Step-by-step explanation:

The pricing difference indicates that demand is relatively more elastic in market X than market Y.

In market X, the price-discriminating pure monopoly charges a higher price because demand is more elastic. This means that a small change in price will cause a larger change in quantity demanded. In market Y, the lower price suggests that demand is relatively less elastic. Here, a change in price will not have as significant of an impact on quantity demanded.

Overall, the pricing difference reflects the different elasticities of demand in each market.