Sal's satellite company, which isa monopoly, broadcasts TV to subscribers in Los Angeles and New York. The demand functions for each of these two submarkets are:

QNY= 60 - 0.25PNY

QLA= 100 - 0.50PLA

where Q is in thousands of subscribers per year and P is the subscription price per year. The total cost of providing Q units of service is given by TC= 1000 + 40Q and the marginal cost is MC=40. We also know thatQ= QNY+ QLA.

a. Suppose this monopoly decides to engage in3rddegree price discrimination. Calculate the profit-maximizingprice and quantityfor the New York and Los Angeles markets.

b. Based on your answers in part (a), what can you say about theelasticity of demandin New Yorkrelativeto LA?No calculation needed.

c. Suppose your friend says that the type of price discrimination that this monopolist is practicing is great because with this type of discrimination there is no deadweight loss. Do you agree or disagree with your friend?Explainwhy. You may use graphs to support your explanation.

d. Let's suppose that as a consequence of a new satellite that the Pentagon recently deployed, people in Los Angeles receive Sal's New York broadcasts and people in New York receive Sal's Los Angeles broadcasts. As a result,anyone in New York or LA can receive Sal's broadcasts by subscribing in either city. Can Salcontinue to price discriminate?Explain. Based on your response,what price should he charge in New York and Los Angeles?