Consider a monopoly with a constant marginal cost of 10 that faces the following inverse demand function from senior citizens: Ps = 50 – 2Qs The monopoly also faces the following inverse demand function for all other customers: Po = 35 – Qo (a) List and explain the three conditions that must be satisfied for a firm to be able to price discriminate. (b) Solve for the monopoly's profit maximizing price and output levels assuming that they can price discriminate. (c) In this example, who benefits and who loses from price discrimination? Be sure to explain/justify your answer.

Consider a monopoly with a constant marginal cost of 10 that faces the following inverse demand function from senior citizens: Ps = 50 – 2Qs The monopoly also faces the following inverse demand function for all other customers: Po = 35 – Qo (a) List and explain the three conditions that must be satisfied for a firm to be able to price discriminate. (b) Solve for the monopoly's profit maximizing price and output levels assuming that they can price discriminate. (c) In this example, who benefits and who loses from price discrimination? Be sure to explain/justify your answer.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.10P

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