The market for polished North American elk ivory has two distinct groups of consumers: jewelers and collectors. Their demands are given by:

DJ (P) = 120 4P

DC (P) = 100 4P

A single taxidermist has cornered the market. He can act as a monopolist and has variable costs: VC(Q) = Q^2

a) Calculate market demand.

b) Calculate marginal revenue for the monopolist assuming he can charge just one price. c) What is his profit-maximizing output and price?

d) Calculate CS for each group as well as PS and DWL.

e) Now suppose he can price discriminate by setting two prices; one for each group of consumers. What are his profit-maximizing outputs and prices?

f) Repeat (d) at the prices and quantities from (e).

g) Who benefits and who is harmed by price discrimination? Is TS higher with price discrimination?