4. You are the manager of a monopoly that sells a product to two groups of consumers...

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4. You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1’s elasticity of demand is 2, while group 2’s is 6. Your marginal cost of producing the product is $10.

a. Determine your optimal markups and prices under third-degree price discrimination.

b. Identify the conditions under which third-degree price discrimination enhances profits.

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