Problem: M is a monopolist selling goods G. M's cost function is c(y)=4y where y is the total production of G. Some of M's potential customers are members and get a member magazine with coupons. Member demand curve: X1(p, C)=42-(p-C) where X1(p, C) is member demand, p-C is the price they actually pay, p the official price, and C is price reduction with coupon.
Customers' without membership (and therefore no coupons) demand curve: X2(p, C)=32-(p/2)
With price discrimination, what will be the profit maximizing official price, p and what will C be?
Without price discrimination, what p and quantity will maximize profit?
How much would M be willing to pay for the coupon advertising if that is their only way to price discriminate?