Suppose there are two types of consumers. The demand for each type of consumer is given by:
Type A: Q = 100 – 2P
Type B: Q = 80 – 4P
Suppose a monopolist has constant marginal cost = 6. Also, for parts a-b, assume that the monopolist is unable to distinguish between the two types of consumers.
(a) What price should the monopolist charge?
(b) How much profit will this monopolist make?
(c) What price should the monopolist charge to each type of consumer?
(d) How much total profit does the price discriminating monopolist make?
(e) Calculate the price elasticity of demand for Type A consumers at the monopolist’s profit maximizing price.
(f) Calculate the price elasticity of demand for Type B consumers at the monopolist’s profit maximizing price.