You are the manager of a monopoly that sells a product to two groups of consumers in
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Question:
You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1's elasticity of demand is -2, while group 2's elasticity of demand is -6. Your marginal cost of producing the product is $10.
a) Determine your optimal markups and prices under third degree price discrimination.
b) Discuss briefly the conditions under which third degree price discrimination enhances profits
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