Question

18,000-100P1 and the demand function for the second group are given as Q2 = 17,000-100P2. The marginal cost for each group is $5.00. What will be the profit, if they cannot successfully segment the markets for the two groups of people? What will be the profit if they can successfully discriminate against 2 groups of people?

Answer 1

$$Q_1=18,000-100p_1$$

$$Q_2=17,000-100p_2$$

$$Q=35,000-100p_1-100p_2$$

$$MC=p_1=p_2=5$$

$$Q=35,000-200\times 5=34,000$$

$$MC=p_1=5$$

$$Q=18,000-100\times5=17,500$$