A monopoly beer producer sells beer to two markets and the demand for the beer in each market is given by

Market A: Q_a=

40-2p_a

Market B: Q_b=

90-3p_b

where Q is the total number of beer. A bottle of beer can be

produced at a constant marginal cost of $14.

a.) If the beer producer can charge different prices to each

market through price discrimination, what price and quantity will it set in

each market? Compare the demand elasticities of each market at the equilibrium.

What is the total profit from both the markets?

b.) If the beer producer cannot price discriminate, what price

and quantity will it sell to each market? Is the profit higher or lower than

the profit under price discrimination?

c.) Suppose there is a middleman who can buy beer in a cheap market

and resell it in an expensive market with a transportation cost of $3 per unit.

If price discrimination is still possible, what are the prices charged by the

monopoly in each market? What is the total profit of the monopoly?