Reference no: EM133127203

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 -3, while group 2's is -4. Your marginal cost of producing the product is $20.

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: $  (      )

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

Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once to place a check mark. For incorrect answer(s), click twice to empty the box.