1. Give some examples of third-degree price discrimination. Can third-degree price discrimination be effective if the different groups of consumers have different levels of demand but the same price elasticities?
2. Show why optimal, third-degree price discrimina- tion requires that marginal revenue for each group of consumers equals marginal cost. Use this condition to explain how a firm should change its prices and total output if the demand curve for one group of consum- ers shifts outward, causing marginal revenue for that group to increase.