Bobbie's Hair Care is a natural monopoly. Table 1 shows the demand schedule (the first two columns) and Bobbie's marginal cost schedule (the middle and third columns). Bobbie has done a survey and discovered that she has four types of customers each hour: one woman who is willing to pay $18, one senior who is willing to pay $16, one student who is willing to pay $14, and one boy who is willing to pay $12. Suppose that Bobbie's fixed costs are $20 an hour and Bobbie's price discriminates.
Who benefits from Bobbie's price discrimination? Is the quantity of haircuts efficient?
