A Monopolist Faces Two Consumer Groups: Old and Young

Multiple Choice

A monopolist faces two consumer groups: old and young. The inverse demand of old clients for the output of the monopolist is P_o = 100 - 2Q_o. The inverse demand of young clients for the output of the monopolist is P_y = 80 - Q_y. The marginal cost of supplying any type of client is MC = 10. If the monopolist can price discriminate between the two groups (i.e., charge a different uniform price to each group) , what price will old and young clients be charged?

A) P_o = $45; P_y = $55
B) P_o = $55; P_y = $45
C) P_o = $50; P_y = $50
D) P_o = $40; P_y = $60