A monopolist sells to two consumer groups, students and non-students
Demand for students: Q = 500 - 1/2P
Demand for non-students: Q = 750 - 2P
MC = 20
Find the profit-maximizing price/quantity combination in each market if the groups can be separated.
Students:
P = 1000 - 2Q
MR = 1000 - 4Q
Set MR = MC. 20 = 1000 - 4Q
245 = Q, P = $510
Non-students:
P = 375 - 1/2 Q
MR = 375 - Q
Set MR = MC. 20 = 375 - Q
355 = Q, P = $197.50
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