A Firm Sells an Identical Product to Two Groups of Consumers

Multiple Choice

A firm sells an identical product to two groups of consumers, A and B. The firm has decided that third-degree price discrimination is feasible and wishes to set prices that maximize profits. Which of the following best describes the price and output strategy that will maximize profits?

A) P_A = P_B = MC.
B) MR_A = MR_B.
C) MR_A = MR_B = MC.
D) (MR_A - MR_B) = (1 - MC) .