Question

There is a monoplolistic firm which knows that the market demand function is p = 1-q....

There is a monoplolistic firm which knows that the market demand function is p = 1-q. If the firm can set two prices p1, and p2

Find the p1, p2 the firms will set and also find the q1,q2 according to the prices.

and Tell which price discrimination method that this pricing is the closest to.

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Answer #1

This pricing is the closest to Third-Degree Price Discrimination.

Here monopolist sells to different people at different prices, but every unit of the good sold to a given group is sold at the same price.

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