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Assignment help 1557

A price discriminating defense monopolist manufacturer has a marginal cost of MC = $200. The monopolist can segment the market into two different groups: Customer A has a demand P = 400 -.5Q  and MR=400-Q. Customer B demand is P = 300 – Q and MR=300-2Q.

  1. How many units and at what price should the producer sell to each customer, using the MR=MC rule for each?
  1. Is price discrimination better for the producer than a standard price? To find out, Pick any one standard price (somewhere between the two prices) for all customers and examine if the revenue would be higher or lower with a standard price?


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