A food company A produce one type of frozen fruits sold directly to consumers and ice-cream shops, and firm A has a marginal cost of $2. Firm A charges the two groups of consumers differently based on the following demand functions:

P1=5-2Q1

P2=10-Q2

Use the given information to answer the following questions:

1. For the two market segments, which group is more responsive to price?

(Hint: you may consider using own price elasticity of demand)

2. Find the optimal prices for company A in each of the market segment.

(Hint: you need to consider the profit maximisation condition)