Suppose there's a monopolist who can distinguish between two "types" of customers of her firm. She has costs of MC = AC = 5.
She does not post prices, but instead tells each customer the price after figuring out the customer's type. If customers of the first type have demand equal to
Q1 = 125 - P1 and the other have demand equal to
Q2 = 75 - (1/3)P2, what will be the equilibrium price charged and the equilibrium quantity sold to each type?
Other than "having monopoly power", what needs to be true for the monopolist to keep following this pricing strategy?