Lydia owns a railroad company in Belgium and acts as a monopolist. Each train has two types of seats on its trains: business class and economy class. All of the customers prefer business class seats to economy class seats; however, price-sensitive people choose to buy the economy seats. Lydia is able to buy seat cushions that she could install in economy class that would increase the economy class consumers' willingness to pay for economy class by more than the cost of installing the cushions. What will happen to Lydia's profits when she installs the cushions?

Lydia will increase her profits by installing the cushions

Lydia will decrease her profits by installing the cushions

Lydia's profits will be unchanged by installing the cushions

The answer is ambiguous

Answer rating: 100% (QA)

In the given situation price sensitive people pref... View the full answer