(3rd Degree Price Discrimination) Consider a monopolist serving two identifiably distinct markets with no resale possible, so that the monopolist may practice third-degree price dis- crimination. Demand in market 1 is given by D1(p1) = 800 − 8p1 and demand in market 2 is given by D2(p2) = 1200 − 12p2. Marginal cost is constant, M C = 10, and there is no fixed cost.
A) Find the marginal revenue curve in each market, M R1(q1) and M R2(q2).
B) Find the values of price charged and quantity sold by the monop- olist in each market. Be sure to list all of them: p1, q1, p2, and q2.
C) Now suppose resale becomes possible, so that the monopolist can no longer price discriminate. What (uniform) price, pm, does it charge? What is the total quantity it sells, Qm?
D) How much more profit does the monopolist receive while price discriminating than when it sets a uniform price?
Get Answers For Free
Most questions answered within 1 hours.