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Need Help with this question as well 3. (30 pts) As the patent holder for Gastroid, a revolutionary over-the counter drug designed to treat indigestion,

Need Help with this question as well

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3. (30 pts) As the patent holder for Gastroid, a revolutionary over-the counter drug designed to treat indigestion, you hold a monopoly in your relevant drug market. You know that there are two kinds of people: those with chronic indigestion, with an inverse demand curve of Py = 500 - 20, and those with occasional stomach troubles, with an inverse demand curve of Pr = 100 -Q. where Q) is in doses. Your marginal cost of production is constant at AC = 20, and you have no fixed costs. (a) (8 pts) You decide to try out third degree price discrimination, Draw the inverse demand curves, marginal revenue curves, and marginal cost curves for the two market segments (one graph per market). Label all intercepts on the price and quantity axis for each. (b) (8 pts) What price will you charge in the chronic indigestion market? What about the occasional stomach trouble market? What are your expected total profits if the price discrimination works? (c) (7 pts) What market traits are required to make price discrimination work? Are there any aspects of this market that might make it difficult to keep third degree price discrimination working? (d) (7 pis) A new head of the Department of Justice outlaws price discrimination by medical condi- tion. On a new graph, sketch an approximate market demand curve and market marginal revenue curve if you were to sell to both customer types in the joint market (exact values aren't important here, I just want the general shape of the curves)

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