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Suppose the chemical firm cannot practice first-degree price discrimination and chooses to offer a second-degree quantity discount menu. To maintain incentive compatibility the firm will
Suppose the chemical firm cannot practice first-degree price discrimination and chooses to offer a second-degree quantity discount menu. To maintain incentive compatibility the firm will give back an additional $600 in consumer surplus to the high-demand consumer. What will be the prices charged to each consumer type in the new framework?
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