Let a monopolist face consumer group A with inverse demand P_A = 100 - 2Q_A and consumer group B with inverse demand P_B = 80 - Q_B?. The monopolist can conduct third degree price discrimination, but faces a capacity constraint that Q_A + Q_B ≤ 100. What will be the amount supplied to each of the customer groups? A) Q_A = 50; Q_B = 50. B) Q_A = 60; Q_B = 40. C) Q_A = 33.67; Q_B = 66.33 D) Q_A = 36.67; Q_B = 63.33

Question

Quizplus · Accepted Answer

The monopolist maximizes profit by equating marginal revenue for each group and considering the capacity constraint. Solving the equations gives Q_A = 36.67 and Q_B = 63.33.

Let a Monopolist Face Consumer Group a with Inverse Demand