Which of the following is an example of a price-discriminating monopoly?

• A. A movie theater charging different prices for adults and children
• B. A government-regulated utility with fixed rates
• C. A monopolist charging the same price to all customers
• D. A perfectly competitive wheat farmer

Answer: (A)

Verified step by step guidance

1. Step 1: Understand the concept of price discrimination. Price discrimination occurs when a monopoly charges different prices to different groups of consumers for the same product, based on their willingness or ability to pay, rather than differences in cost.
2. Step 2: Identify the characteristics of a price-discriminating monopoly. It must be a single seller (monopoly) who can segment the market and prevent resale between groups, charging different prices to maximize profits.
3. Step 3: Analyze each option: A movie theater charging different prices for adults and children is an example of price discrimination because the theater charges different prices to different groups for the same service.
4. Step 4: Contrast with other options: A government-regulated utility with fixed rates and a monopolist charging the same price to all customers do not practice price discrimination because prices are uniform across consumers.
5. Step 5: Recognize that a perfectly competitive wheat farmer cannot price discriminate because they are price takers in a competitive market, not a monopoly.