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A discriminating monopolist sets price ₹ 30. Market A has elasticity 2 (MR = ₹ 15) and market B has elasticity 5 (MR = ₹ 24). Transferring one unit of output from A to B changes total revenue by:
ANo change at all
BA loss of ₹ 9
CA gain of ₹ 39
DA gain of ₹ 9
Answer & Solution
Correct answer: D. A gain of ₹ 9
1. Moving a unit out of A loses A's marginal revenue of ₹ 15.
2. Adding that unit to B gains B's marginal revenue of ₹ 24.
3. Net change = 24 - 15 = +₹ 9.
4. So total revenue rises by ₹ 9, which is why the firm shifts output toward the higher-elasticity market.
_Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit III "Price-Output Determination under Different Market Forms", p.16_
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