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A sand and gravel company sells pea gravel. It faces two types of customers with the following inverse demand curves: TypeA: P = 3.5 -

A sand and gravel company sells pea gravel. It faces two types of customers with the following inverse demand curves:

TypeA: P = 3.5 - 0.002Q

TypeB: P = 3 - 0.001Q

where Q measures bags of pea gravel and P is the price per bag. The marginal cost is $0.50 per bag. Suppose the business wants to use discounting to price discriminate.

  1. The consumer surplus for Type B consumers with the regular price (no price discount) is $____.
  2. The consumer surplus for Type B consumers with the price discount is $____.

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