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Monopoly seller of mineral water

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Reference no: EM131055150

Suppose a monopoly seller of mineral water is able to segment its market into three consumer groups: 1, 2, and 3. The (inverse) demand for mineral water on the part of each group is given by:

Group 1 Demand: P1 = 1000 - (1/2)Q1

Group 2 Demand: P2 = 1000 - (1/3)Q2

Group 3 Demand: P3 = 1000 - (1/5)Q3

The total cost faced by the monopolist is: TC = 100Q, where the quantity produced (Q) is distributed across the 3 groups such that Q1 + Q2 + Q3 = Q. Having the ability to charge each group a unique price, determine the profit-maximizing price and quantity the monopolist should set for each group, as well as the firm's profit.

Reference no: EM131055150

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