A new computer set up is sold online. They have two groups of consumers, novice(N) engineersand professional (P) engineers. The demands of these two groups are as follows:

QN(p)=500p

QP(p)=15001.5p

Suppose that this set uphas a marginal cost of $50 for each unit it produces

What is the aggregate inverse demand of the market?

Q(p)={15001.5p,if500

abp, ifp500

a=

b=

What are the profit-maximizing prices for each group of consumers? What are the quantities sold to each group under these prices?

What is the profit under price discrimination? What is the reservation price?