2. A monopolist sells tours of a stately Montana home to two groups of consumers, Montanans (M) and others (O). The monopolist knows the total demand for group O, which is Qo=100-2P, and the total demand for group M, which is QM =80-2P. The monopolist is able to identify consumers by inspecting their IDs and can thus apply third-degree price discrimination. The monopolist's cost function is C(G) = 4Q + 20. a. What price will the monopolist charge for group O? What price will the monopolist charge for group M? What is the monopolist's total profit?

2. A monopolist sells tours of a stately Montana home to two groups of consumers, Montanans (M) and others (O). The monopolist knows the total demand for group O, which is Qo=100-2P, and the total demand for group M, which is QM =80-2P. The monopolist is able to identify consumers by inspecting their IDs and can thus apply third-degree price discrimination. The monopolist's cost function is C(G) = 4Q + 20. a. What price will the monopolist charge for group O? What price will the monopolist charge for group M? What is the monopolist's total profit?

ECON MICRO

5th Edition

ISBN:9781337000536

Author:William A. McEachern

Publisher:William A. McEachern

Chapter13: Capital, Interest, Entrepreneurship, And Corporate Finance

Section: Chapter Questions

Problem 1.1P

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