The correct answer is: Price in the market I is 2/3 of the price in market II.
Price discrimination is a pricing strategy where a firm charges different prices for the same good or service to different consumers. This can be done based on factors such as location, time of day, or type of customer.
A discriminating monopoly is a monopoly that can price discriminate. This means that the firm can charge different prices in different markets, or to different consumers in the same market.
The elasticity of demand is a measure of how responsive consumers are to changes in price. A higher elasticity of demand means that consumers are more sensitive to changes in price, and a lower elasticity of demand means that consumers are less sensitive to changes in price.
In a discriminating monopoly, the firm will charge a higher price in the market with a lower elasticity of demand. This is because consumers in this market are less sensitive to changes in price, and the firm can therefore charge a higher price without losing too many customers.
In the question, the elasticity of demand in market I is 5 and in market II is 2.5. This means that the elasticity of demand in market I is twice as high as the elasticity of demand in market II. Therefore, the firm will charge a higher price in market II.
The price in market I will be 2/3 of the price in market II. This is because the elasticity of demand in market I is twice as high as the elasticity of demand in market II. Therefore, the firm can charge a higher price in market II without losing too many customers.
The other options are incorrect because they do not take into account the elasticity of demand in the two markets.