You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1's elasticity of demand is -3, while group 2's is-5. Your marginal cost of producing the product is $40. Instructions: Enter your responses rounded to two decimal places. a. Determine your optimal markups and prices under third-degree price discrimination. Markup for group 1:[ Price for group 1: $ Markup for group 2: Price for group 2: $

You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1's elasticity of demand is -3, while group 2's is-5. Your marginal cost of producing the product is $40. Instructions: Enter your responses rounded to two decimal places. a. Determine your optimal markups and prices under third-degree price discrimination. Markup for group 1:[ Price for group 1: $ Markup for group 2: Price for group 2: $

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter25: Monopoly

Section: Chapter Questions

Problem 2E

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Describe the concept of price elasticity! Why it is for a monopoly less profitable to act inmarkets with high price elasticity? What can a monopolist or a firm with market power do, inorder to increase the profits?