(a) What are the necessary conditions for profitable price discrimination by Cambrian?

(b) What profit -maximizing rule will Cambrian use if setting prices as a discriminator?

Determine the profit- maximizing quantity of freight service Cambrian will supply,

show how this will be divided between steel and agriculture and find the prices charged

in each market. Calculate Cambrian's total profit.

(c) Assume that Cambrian is prevented by law from price discrimination. Determine

Cambrian's price and output combination to maximize profit, and hence estimate the

opportunity cost to Cambrian of the Anti-Price Discrimination law.