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Suppose you are a monopolist and you have two customers, A and B. Each will buy either zero or one unit of the good you
Suppose you are a monopolist and you have two customers, A and B. Each will buy either zero or one unit of the good you produce. A is willing to pay up to $45 for your product; B is willing to pay up to $10. You produce this good at a constant average and marginal cost of $3. If you could not engage in third-degree price discrimination, what price would you charge? Vi $45. $15. $10. $55. If you could practice third-degree price discrimination, you will earn a profit of $|:|. (For simplicity, assume that if a consumer is indifferent between buying and not buying, he will buy.)
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