12.21. A pipeline transports gasoline from a refinery at point A to destinations at R and T. The marginal cost of transporting gasoline to each destination is MC ! 2. The pipeline has a fixed cost of 160. The demand curve for the transportation of gasoline from A to R is QR ! 100 " 10PR, where QR is the number of units transported when PR is the transport price per unit. The demand for pipeline movements from A to T will be 20 units as long as If the customers at T will purchase gasoline from another source, buying no gasoline shipped through the pipeline. These demand curves are shown below.

a) If this firm were unable to engage in price discrimination (so that it can only choose a single P for the two markets), what would the profit-maximizing tariff be? What level of profit would the firm realize?

b) If this firm were able to implement third-degree price discrimination to maximize profits, what would the profit-maximizing prices be? What level of profits would the firm realize?