Question: A monopolist is currently and successfully practicing 3 rd - degree price discrimination across two groups of consumers with the following demand functions: 1 (
A monopolist is currently and successfully practicing rddegree price discrimination across two groups of consumers with the following demand functions:
and
Their current production facility has
where
The monopolist feels that the facility is getting old and would like to move to another facility that has lower fixed costs
They have asked you to make a recommendation: should they switch to the newer facility or stay at their current one? Your recommendation must be supported by an explanation and numerical evidence.
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