A Monopolist Faces Two Consumer Groups: Old and Young $P _ { 0 } = 100 - 2 Q _ { 0 }$

question 45

Multiple Choice

A monopolist faces two consumer groups: old and young. The inverse demand of old clients for the output of the monopolist is $P _ { 0 } = 100 - 2 Q _ { 0 }$ . The inverse demand of young clients for the output of the monopolist is $P _ { y } = 80 - Q _ { y }$ . The marginal cost of supplying any type of client is $M C = 10$ . If the monopolist can price discriminate between the two groups (i.e., charge a different uniform price to each group) , what price will old and young clients be charged?

• A) \(P _ { 0 } = \$ 45 ; P _ { y } = \$ 55\)
• B) \(P _ { o } = \$ 55 ; P _ { y } = \$ 45\)
• C) \(P _ { 0 } = \$ 50 ; P _ { y } = \$ 50\)
• D) \(P _ { o } = \$ 40 ; P _ { y } = \$ 60\)

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