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A firm faces the following market demands for two groups of consumers: Q1 = 100 -P...

A firm faces the following market demands for two groups of consumers:

Q1 = 100 -P

Q2 = 50 -(1/2)P

MC = AC =20 (assume it is costless to treat these groups separately)

Use a 3 panel approach (1 panel for the single price, and 2 for the price discrimination) to answer the following questions

A. Solve (and show) a single price equilibrium (find the total demand, and MR, and solve for P, Q, profit)

B. Solve (and show) a price discrimination equilibrium (prices, quantities and total profit).

C. Explain whether the firm would choose to price discriminate in this case (why or why not, and the intuition for this result).

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