Question: Suppose now that we are dealing with a different monopolist, which dominates a market make up by two types of consumers. The first is

a market make up by two types of consumers. The first is

Suppose now that we are dealing with a different monopolist, which dominates a market make up by two types of consumers. The first is the young (Y) folks: The second is the elderly (E) folks: = 50-p The Monopolist also faces a constant Marginal Cost (MC) of $10 per unit. MC = $10 200 If the monopolist cannot engage in any price discrimination, then: a) Show that the monopolist will find it profitable to only serve the larger portion of the market. 50 10 MR QB = = 200 - p DE 50 Dy Q5 = 100 MC 210 Q b) What are the monopolist's profits in this case? = $9,025 Suppose now that the market can engage in 3rd Degree Price Discrimination. c) How much profits will the monopolist now be able to make? = $9,425 3

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