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A firm sells its products to two markets: market A and market B. The marginal cost of production and average total cost of production are

A firm sells its products to two markets: market A and market B. The marginal cost of production and average total cost of production are constant at 60/unit. The demand curves and marginal revenue curves in market A and market B are shown below.

Market A: Market B:

P_A = 156 - 0.2Q_A P_B = 136 - 0.15Q_B

MR_A = 156 - 0.4Q_A MR_B = 136 - 0.30Q_B

If the firm uses third-degree price discrimination, determine the profit-maximizing output level and price level in market A and market B.

Determine the maximum profit that the firm can earn in market A and market B.

In which market is demand more (price) elastic? Explain in no more than two sentences.

In no more than three sentences, explain what third-degree price discrimination means.

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