You work in the Economic Planning Department of a consultants, Econ Consult. You have been asked by the Managing Director to work in a small group with 3 other people to write a response to the following enquiry.

Company Name : We need to know
Contact Name : Dr J Jack
Company Address : Room 101, 77 Old Road, Bath, NW29

The managers of the company are evaluating different options for output and price decisions. They are undecided to opt for the use of price discrimination.

Could you discuss the advantages and disadvantages for the managers if they opted for price discrimination?

The input conditions are;

• Price Elasticity of Demand (1) = 1.0
• Price Elasticity of Demand (2) = 1.0
• Fixed Costs (£) = 80
• Variable Costs 1 (£) = 20
• Variable Costs 2 (£) = 20

Your findings need to be presented in two ways. The first will be as a written report with covering letter and the second will be as a question and answer session on the content of the report.

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