Suppose a monopoly sells to two identifiably different types of customers, A and B, who are unable to practice arbitrage. The inverse demand curve for group A is PA = 10 - QA, and the inverse demand curve for group B is PB = 18 - QB. The monopolist is able to produce the good for either type of customer at a constant marginal cost of 2, and the monopolist has no fixed costs. If the monopolist is
able to practice group price discrimination, the values of the elasticities of the two groups at the profit-maximizing prices are
A) ?A = -1.25, and ?B = -1.5.
B) ?A = -1.5, and ?B = -1.25.
C) ?A = -0.67, and ?B = -0.8.
D) ?A = -0.8, and ?B = -0.67.
B
Economics
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Fred the farmer purchased five new tractors at $20,000 each. Fred sold his old tractors to other farmers for $50,000. The net increase in GDP of these transactions was
A) $50,000. B) $100,000. C) $125,000. D) $150,000.
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