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Internet service in the local market is supplied by Laura's Internet Service. Laura has two types of consumers. The first type of customers is local businesses, and their demand for internet service is
= 6,500 - 100P P = 65 - 0.01
. The resulting marginal revenue function for business customers is MR(QB) = 65 - 0.02
. The second type is residential customers, and residential demand
is
= 12,500 - 500P P = 25 -
. The resulting marginal revenue function for residential customers is MR(QR) = 25 -
QR. Laura's marginal cost function is
MC(QB + QR) =
+
. If Laura practices third-degree price discrimination, what are the profit maximizing prices she charges business and residential customers?
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