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 -5, while group 2’s is -3. Your marginal cost of producing the product is $40.
Determine your optimal mark-ups and prices under third-degree price discrimination.
Instruction: Round your answers to two decimal places.
Mark-up for group 1:
Price for group 1: $
Mark-up for group 2:
Price for group 2: $
Instruction: Round your answers to two decimal places.