Jolly Round Island has the possibility of discriminating its visitors between Group A and Group B.
The demand functions for the two groups are as follows: Group A: PA = 21 - 0.1QA Group B: PB = 50 - 0.4QB
The firm’s total cost function is represented by: TC = 1000 + 8Q, where Q = QA +QB
1. If the monopoly practices third-degree price discrimination, calculate the profit-maximising price and output in each market.
IN YOUR PREVIOUS RESPONSE TO THIS QUESTION 1.
May I know how your convert Group A: PA = 21 - 0.1QA Group B: PB = 50 - 0.4QB
to Marginal revenue for group A is MRA = 21 - 0.2QA and for group B it is MRB = 50 - 0.8QB. Marginal cost is same for both which is MC = 8