Question: A monopolist faces two different groups of demand. The first group is represented by P = 2(1 - Q) and the second by P =

A monopolist faces two different groups of demand. The first

group is represented by P = 2(1 - Q) and the second by P = 1 - Q.

Assume the marginal costs to serve each group is zero, and there are no fixed

costs.

If the monopoly is unable to treat the two groups as separate, what is the

profit maximizing price/quantity and maximal profits?

If the monopoly is able to practice third degree price discrimination, what is the

profit maximizing price/quantity and maximal profits?

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