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A monopolist sells output to two kinds of customers. Type 1 customers have annual demand of Q 1 = 60p and type 2 customers have
A monopolist sells output to two kinds of customers. Type 1 customers have annual demand of Q1 = 60p and type 2 customers have annual demand of Q2 = 80p. There are equal numbers of each type. Assume there are no fixed costs and the marginal cost of 1 is equal to $20 (or C(q) = 20q). If the monopolist can separate the two types of customers by visual inspection and price discriminate, what is the monopolists optimal pricing policy?
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