Third degree price discrimination: A firm is a monopoly in two markets. The demand function in market 1 is p1 = 2 - q1 and p2 = 1 - q2 in market 2. The cost function is C (Q) = 2Q2: Will the firm be willing to serve market 2?© BrainMass Inc. brainmass.com October 10, 2019, 1:46 am ad1c9bdddf
The monopoly chooses to charge the different prices to different group of consumers at where MR = MC in each market,
P1 =2 -q1
TR1 = P1*q1
= (2- q1)*q1
MR1 = ∂TR1/∂q1
Third degree price discrimination is typified.