Question

A monopolist sells its product in two separate markets with different price elasticities of demand. The marginal cost of production is constant at $20 per unit. The price elasticity of demand in Market 1 is −2-2−2 and in Market 2 is −3-3−3. What are the profit-maximizing prices in Market 1 and Market 2?

A $30 in Market 1 and $25 in Market 2
B $25 in Market 1 and $30 in Market 2
C $20 in Market 1 and $20 in Market 2
D $ 40 in Market 1 and $30 in Market 2
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