Answer to Question #71435 in Microeconomics for rebecca

Question #71435
Suppose a monopolist is able to segment its market into 2 consumer groups based upon known differences in willingness to pay. Group A's demand function is given by P = 90 - 2Q and group B's demand function is given by P = 70 - 0.5Q. In addition, the marginal cost of producing and selling a unit to group A is the same as the marginal cost of producing and selling a unit to group B. Specifically, MC = 10. If the firm practices second degree (or multi-market) price discrimination, then total profit will be maximized by:
i. selling Q = 20 units at a price of P = $50 to members of group A
ii. selling Q = 40 units at a price of P = $10 to members of group A
iii. selling Q = 60 units at a price of P = $40 to members of group B
iv. selling Q = 80 units at a price of P = $30 to members of group B
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Expert's answer
2017-12-01T14:44:06-0500
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