What prices would she charge to each group of consumers

Question

Problem

A seller produces output with a constant marginal cost MC = 2. Suppose there is one group of consumers with the demand curve P₁ - 16 - Q₁, and another with the demand curve P₂ = 10 - (1/2)Q₂.

a) If the seller can discriminate between the two markets, what prices would she charge to each group of consumers? (You may want to exploit the monopoly midpoint rule from Learning-By-Doing Exercise 11.5.)

b) If the seller cannot discriminate, but instead must charge the same price P₁ = P₂ - P to each consumer group, what will be her profit-maximizing price?

c) Which, if any, consumer group benefits from price discrimination?

d) If instead P₁ = 10 - Q₁, does either group benefit from price discrimination?

The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.