Horizon Telephone observes that there are two types of demand for telephone services: businesses and families. The business' demand curve is  x _b = 100 - p _b , where x _b measures the hours of telephone services that businesses purchase per week and p _b is the price per hour charged to businesses. The families' demand curve is x _F = 15 - pf/2  , where x _F and p _F represent hours and price, respectively. Horizon Telephone's cost function is C(x) = x, where x = x _b + x _F .

a) Suppose Horizon Telephone can price discriminate between the two groups. Calculate the hours of telephone services that it sells to each group, the two prices, and total profit.

b) Calculate the consumers' and producer's surplus under price discrimination.

c) Suppose the government forbids price discrimination. Then, the total demand for telephone services is obtained from the horizontal sum of the demands from the two groups (businesses and families). Calculate the solution to the monopolist's problem and profits.

d) Now calculate the consumers' and producer's surplus if price discrimination is forbidden. Is society better or worse off after this change is introduced?