Answer to Question #287855 in Microeconomics for Bunnybear

Question

6. Does a monopoly’s ability to price discriminate between two groups of consumers depend on its marginal cost curve? Why or why not? Consider two cases: (a) the marginal cost is so high that the monopoly is uninterested in

selling to one group, and (b) the marginal cost is low enough that the monopoly wants to sell to both groups. (10)

Answer 1

Depends on marginal cost because the monopoly will only sell to both groups if selling to each is separately profitable.