1.Consider a monopolist who sells to two groups of consumers. Group A has the demand function and Group B has the demand function . Suppose the monopolist has no costs.

a)Show that the monopolist can make more profits by price discriminating than by charging the same price to the two groups.

[20 marks]

b)Suppose that the monopolist has to pay a fixed cost, c, if they want to price discriminate. For what values of c would the monopolist choose to price discriminate?

[8 marks]

c)Are consumers better off with or without price discrimination?

[5 marks]