You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Analysts at yourfirm have determined that group 1's elasticity of demand is -6, while group 2's is -4. Your marginal cost of producing the product is$50.a. Determine your optimal markups and prices under third-degree price discrimination.Instructions: Enter your responses rounded to two decimal places.Markup for group 1:Price for group 1:$Markup for group 2:Price for group 2: $b. Which of the following are necessary conditions for third-degree price discrimination to enhance profits.Instructions: In order to receive full credit, you must make a selection for each option. For correct answer(s), click the box once toplace a check mark. For incorrect answer(s), click twice to empty the box.We are able to prevent resele between the groups.At least one group has elasticity of demand less than one in absolute value.There are two different groups with different (and identifiable) elasticities of demand.At least one group has elasticity of demandgreater than 1 in absolute value.Type here to searchiiECaS|ហ68°F Sunny

Lerner index: It states the relationship among price, marginal cost and price elasticity of demand.…

You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Analysts at your firm have determined that group 1's elasticity of demand is -6, while group 2's is -4. Your marginal cost of producing the product is $50.

You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Analysts at your firm have determined that group 1's elasticity of demand is -6, while group 2's is -4. Your marginal cost of producing the product is $50.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.12P

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