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 3rd-degree price discrimination across two groups of consumers with the following demand functions: 1(1)=4290.61
and 2(2)=2760.32
. Their current production facility has ()=12,300+138
where =1+2
.
The monopolist feels that the facility is getting old and would like to move to another facility that has lower fixed costs ()=8,800+279
. 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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