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Acme Widgets is a monopolist in the widget market. The widget market consists of 75 A’s...

Acme Widgets is a monopolist in the widget market. The widget market consists of 75 A’s and 25 B’s. The A’s are willing to pay $90 for a high quality widget; the B’s are willing to pay $200 for a high quality widget. Each consumer will either buy 1 high quality widget or no widgets. Acme can produce a high quality widget at zero cost.
(a) Suppose initially Acme cannot engage in any form of price discrimination. Find Acme’s profit maximizing price. How much profit will Acme earn?
(b) Now suppose Acme can identify who is an A and who is a B and is able to engage in third degree price discrimination. How much profit will Acme earn?

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