Question

Suppose there are two types of consumers: Type A and Type B. The demands for a monopolist’s product for each type

of consumers are given by:

Type A : Q=100-4P

Type B: Q=60-P

Assume that marginal cost of production is constant and MC=4. There are NO fixed costs.

a) If the monopolist is able to charge different prices to each type of consumer, what price will she charge Type A consumer?

b)What price will she charge Type B consumer?

c)How much profit will the monopolist make?

For parts d-e, suppose the monopolist cannot price discriminate between the two groups and so is forced to charge a single price for both type of consumers,

d)What price will the monopolist charge?

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