A Monopolist Faces Two Consumer Groups: Old and Young

question 11

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_o = 100 - 2Q_o. 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 MC = 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_o = $45; P_y = $55
• B) P_o = $55; P_y = $45
• C) P_o = $50; P_y = $50
• D) P_o = $40; P_y = $60

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Definitions:

Left Hemisphere

The hemisphere of the brain associated with analytical thought, language, reasoning, and logical abilities, typically dominant in right-handed individuals.

Visual Information

Data or inputs received by the visual system, including both what is seen with the eyes and how it is processed by the brain.

Manifest Content

In psychoanalytic theory, the apparent storyline of a dream as remembered by the dreamer.

Latent Content

In psychoanalytic theory, it refers to the hidden psychological meaning of dreams, as opposed to the manifest content, which is the literal storyline of the dream.