Please help me solve these, I'm stuck! Question 1: A profit maximizing monopoly can profitably price discriminate
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Please help me solve these, I'm stuck!
Question 1: A profit maximizing monopoly can profitably price discriminate between two groups of consumers, A and B. The price elasticity for group A is always 3 while that for B is always 2. Given this information, the price charged to group A should be
A twice the price charged to group B.
B three quarters the price charged to group B.
C one half the price charged to group B.
D one quarter the price charged to group B.
E equal to the price charged to group B.
F None of the above
Question 2: A firm has production technology given by Q = 150K0.7L0.3 + L. The returns to scale are
- decreasing
- increasing
- constant
- possibly any of the above
- none of the above
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