Business, 27.11.2019 23:31 wednesdayA

Why does optimal third-degree price discrimination require that marginal revenue for each group of consumers equals marginal cost? assume that marginal cost increases with output and that there are only two groups of consumers. if marginal revenue for one group was greater than marginal cost, a. the firm could increase profit by setting the same price for both groups. b. the firm could increase profit by lowering the price and increasing output for that group, and then increasing output and raising the price for the other goup. c. the firm could increase profit by raising the price and increasing output for that group, and then decreasing output and lowering the price for the other goup. d. the firm could increase profit by lowering the price and increasing output for that group, and then increasing output and lowering the price for the other goup. e. the firm could increase profit by lowering the price and increasing output for that group, and then decreasing output and raising the price for the other goup. use this condition to explain how a firm should change its prices and total output if the demand curve for one group of consumers shifts outward, causing marginal revenue for that group to increase. assume that marginal cost increases with output and that there are only two groups of consumers. if demand increases for one group, the firm should ▼ the output for that group, while ▼ the output and ▼ the price for the other group. in the group with the increased demand, the price may or may not increase depending on how the curve shifts.

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