Details of price discrimination

Reference no: EM1370369

M is the monopolist selling goods G. M's cost function is c(y)=4y where y is total production of G. Some of M's potential customers are members and get the member magazine with coupons. Member demand curve: X1(p, C)=42-(p-C) where X1(p, C) is member demand, p-C is the price they actually pay, p the official price, and C is price reduction with coupon.

Customers' without membership (and therefore no coupons) demand curve: X2(p, C)=32-(p/2)

With price discrimination, what will be the profit maximizing official price, p and what will C be?

Without price discrimination, what p and quantity will maximize profit?

How much would M be willing to pay for the coupon advertising if that is their only way to price discriminate?

Reference no: EM1370369

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