You are the manager of a monopoly that sells a product to two groups of consumers in different parts of the country. Group 1’s elasticity of demand is -2, while group 2’s is -5. Your marginal cost of producing the product is $10.

a. Determine your optimal markups and prices under third-degree price discrimination.  
Instructions: Enter your responses rounded to two decimal places.

Markup for group 1:

Price for group 1: $

Markup for group 2:

Price for group 2: $

b. Which of the following are necessary conditions for third-degree price discrimination to enhance profits. We are able to prevent resale between the groups.unanswered At least one group has elasticity of demand greater than 1 in absolute value.unanswered At least one group has elasticity of demand less than one in absolute value.unanswered There are two different groups with different (and identifiable) elasticities of demand.u

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