Type A customer has a demand given by P = 120 − Q. A representative Type B customer has a demand given by P = 150 − 0.5Q. Your costs of production are T C = 20Q [3rd degree Price Discrimination]Using our Type A and Type B consumers from the previous question, and assuming now that our monopolist is restricted to 3rd degree price discrimination:

(a) What is the condition that describes a solution to this profit maximization problem?

(b) What is the profit maximizing price to charge in each of these markets?

(c) Suppose that instead of having a constant marginal cost, you had an increasing marginal cost. How would that change the set of steps you needed to follow to determine the profit-maximizing price in each market?

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answer a The condition for profit maximization for a monopolist using 3rd degree price discrimination is to set the price for each market such that ma... View the full answer