4. Third-Degree Price Discrimination. A monopolist has two sets of customers: low demand and high demand. Suppose that the demand functions for both types of consumers are given by the following equations: QL-1600-2PL and Qi-4800 - P.The monopolist faces constant marginal cost of $200. Suppose that the monopolist can separate the two groups and charge separate, profit maximizing prices to each. Suppose that cannot discriminate between the two groups (Hint: be careful in your analysis and think of reservation prices) 1. What price will the monopolist set? 2. What is consumer surplus in this case?
4. Third-Degree Price Discrimination. A monopolist has two sets of customers: low demand and high demand. Suppose that the demand functions for both types of consumers are given by the following equations: QL-1600-2PL and Qi-4800 - P.The monopolist faces constant marginal cost of $200. Suppose that the monopolist can separate the two groups and charge separate, profit maximizing prices to each. Suppose that cannot discriminate between the two groups (Hint: be careful in your analysis and think of reservation prices) 1. What price will the monopolist set? 2. What is consumer surplus in this case?
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Chapter13: Antitrust And Regulation
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Transcribed Image Text:4. Third-Degree Price Discrimination.
A monopolist has two sets of customers: low demand and high demand. Suppose that the
demand functions for both types of consumers are given by the following equations:
QL-1600-2PL and Qu-4800 - P.The monopolist faces constant marginal cost of
$200. Suppose that the monopolist can separate the two groups and charge separate,
profit maximizing prices to each.
Suppose that cannot discriminate between the two groups (Hint: be careful in
your analysis and think of reservation prices)
1. What price will the monopolist set?
2.
What is consumer surplus in this case?
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