Consider the monopoly selling air tickets in two differentiated markets where demand

function for young people is PQ and for senior citizens is PQ

The marginal cost incurred by the monopolist is Rs per unit.

a What prices maximize the monopolists profit if it can discriminate between

the markets? What are the optimal quantities and profit?

b Find the optimal profit if monopolist cannot discriminate. Show that profit

in this case is always less than the one obtained by discriminating between

markets.

c In case of discriminating monopolist, comment on the relationship between

price charged in a market and the price elasticity of demand in that market.