Answer to Question #90015 in Economics of Enterprise for Bright

Question

Consider a monopolist with the following demand functions for different market segments q1=16-0.2P1
q2=9-0.5P2
Where q1 and q2 are the quantities demanded in markets 1 and 2 respectively, and p1 and p2 are the prices charged in the two market s. The cost function is C=50+20 (q1+ q2).

Answer 1

In this case the monopolist can charge different prices, if customers can be placed in groups based on certain attributes and charged a different price, so the price discrimination is possible.