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Consider the following monopolist facing two different segments of demand. The first group of demanders is representable by: P = 2(1Q) and the second by:
Consider the following monopolist facing two different segments of demand. The first group of demanders is representable by:
P = 2(1Q) and the second by: P = 1Q
Assume the marginal costs to serve each group is the same, zero, and there are no fixed costs.
(a) If the monopoly is unable to treat the two groups as separate, find the profit maximizing price and quantity, find maximal profits.
(b) If the monopoly is able to practice third degree price discrimination, find the profit maximizing prices and quantities, and find maximal profits.
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