A recent graduate from medical school is the only Doctor in a large country town. She faces the following daily demand schedule for consultations:

Price/WTP ($) Quantity demanded per day

100 0

90 1

80 2

70 3

60 4

50 5

40 6

30 7

20 8

10 9

0 10

The total fixed cost (TFC) for the Doctor to rent the premises is $100 per day, and the marginal cost of seeing another patient is $4 times the number of units supplied (MC = 4Q, where Q is the number of patients seen).

What is the profit maximizing uniform price or consultation fee for the Doctor to charge? With uniform pricing, what is the profit maximising quantity of patients that she should see each day? What profits will the practice earn?

Explain the nature of perfect price discrimination and explain why the Doctor may be able to use this method of price targeting.

Suppose the Doctor engages in perfect price discrimination.How many patients will she see each day? What prices will she charge? What profits will the practice earn with this pricing regime?