Sells product to two groups of consumers in different parts

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You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1’s elasticity of demand is -2, while group 2’s is -5. Your marginal cost of producing the product is $10.

a. Determine your optimal markups and prices under third-degree price discrimination. Instruction: Round your answers to two decimal places. Markup for group 1: Price for group 1: $ Markup for group 2: Price for group 2: $

b. Which of the following are necessary conditions for third-degree price discrimination to enhance profits.

Reference no: EM131103590

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