Question

How do you calculate price discrimination?

Answer 1

Monopolist charges a high price in a market where his product has relatively inelastic demand. otherwise he charges a lower price.

Explanation:

Monopolist practices price discrimination. He charges a low price in a market his product faces relatively elastic demand and a high price in a market in which there is relatively inelastic demand for his product.

If he knows the price elasticity, based on that information, he can calculate his price.

New quantity known `Q_2`
Original quantity known`Q_1`
Original price known `P_1`
New Price unknown `P_2`
Elasticity of Demand known `E_d`

`E_d=(Q_1-Q_2)/(P_1-P_2).P_1/Q_1`

Sove it for `P_2`

For each elasticity you will have a price.