Homework answers / question archive / You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country

You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country

Economics

Share With

You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Analysts at your firm have determined that group 1’s elasticity of demand is −2, while group 2’s is −4. Your marginal cost of producing the product is $40.

a. Determine your optimal markups and prices under third-degree price discrimination.

Instructions: Enter your responses rounded to two decimal places.

Markup for group 1:

Price for group 1: $

Markup for group 2:

Price for group 2: $