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07-06-2023
Business

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Problem 2. Third Degree price discrimination Suppose a monopoly can discriminate between two types of consumers: a high demand group with demand pH = 50-39H, and a low demand group with PL = 50-qr. The monopoly's production function is Q=q+qL and its total cost is given by TC(Q)=Q². (a) Write the monopolist profit as a function of quand qu (b) Compute the monopoly's optimal quantities qu and q. (c) Calculate the profit of the monopoly. (d) Suppose the monopoly decides to separate production into two identical plants, one to produce H and one to produce qz. Compute the monopoly's optimal quantities qu and q. Is this plant separation convenient?

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