2. Suppose that a price-discriminating monopolist has segregated its market into two groups of buyers. The first group is described by the demand and revenue data that you developed for problem 1. The demand and revenue data for the second group of buyers is shown in the table at the top-left corner of the next page. Assume that MC is $13 in both markets and MC 5 ATC at all output levels. What price will the firm charge in each market? Based solely on these two prices, which market has the higher price elasticity of demand? What will be this monopolist’s total economic profit? LO4

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Price Quantity Demanded Total Revenue Marginal Revenue $71 0 $ 0 $63 63 1 63 47 55 2 110 34 48 3 144 24 42 4 168 17 37 5 185 13 32 33 6 198 235 29 7 203