Question: With price measured in £ per thousand units and X being measured in thousands of units per week, consider a monopolist producing X at a constant long-run marginal and average cost of £2 per thousand units, and selling to two groups of consumers whose demand curves are given by
Group 1 ρ = 40 - 2X
Group 2 ρ = 20 - 2X
On the assumption that the monopolist cannot discriminate between the two groups, find:
(a) overall output;
(b) the price of output;
(c) the amount sold to each group of consumers; and
(d) profits.
Calculate all outputs to the nearest 10 units and prices and profits to the nearest penny. On the assumption that the monopolist can discriminate between the two groups, recompute your answers to (a), (c) and (d), and also find the prices at which it sells to the two samples of consumers.