Question

1. A monopolist producer of a sailboat motor sells output in two geographically separated markets (East...

1. A monopolist producer of a sailboat motor sells output in two geographically separated markets (East and West Coasts).  Inverse demand and marginal revenue for the two markets are: 

P1 = 2000 - Q1 and MR1 = 2000 - 2Q1 and P2 = 3000 - 2Q2 and MR2 = 3000 - 4Q2. 

The monopolist’s total cost is C = 500,000 + 1000(Q1 + Q2). What are price, output, profits, marginal revenues, and deadweight loss for the following two cases: 

(a) the monopolist can price discriminate.

 P1* = ___________________________________ Q1* = __________________________________ 

P2* = ___________________________________ Q2* = __________________________________ 

profits = _____________________________ DWL = ________________________________ 

Workspace 

(b) the law prohibits charging different prices to different customers.  Be careful here when finding combined demand, combined inverse demand and combined marginal revenue! 

Combined demand (total quantity as a function of price) when P < $2000: _____________________ 

Combined demand when P is between $2000 and $3000: __________________________________ 

P* = ___________________________________ Q* = ___________________________________ 

profits = ________________________________ DWL = ___________________________________

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
I have question about answer ? please see every ***** I noted below: question :A monopolist...
I have question about answer ? please see every ***** I noted below: question :A monopolist is deciding how to allocate output between two geographically separated markets (East Coast and West Coast). Demand for thetwo markets are: P1 = 10 – 0.25Q1 and P2 = 15 – Q2 The corresponding aggregate demand curve is given as P = 11 – 0.2Q, where Q =Q1+Q2. The monopolist’s marginal cost is fixed at $5 and there are no fixed costs. What are...
1. Consider a monopolist with unit cost c = 20, facing two separate markets with demand...
1. Consider a monopolist with unit cost c = 20, facing two separate markets with demand functions D1(p1) = 100 - p1 and D2(p2) = 60 - 2p2. (a) Find the optimal prices (p1*, p2*) and quantities (q1*, q2*) with price discrimination. (b) Find the optimal price p* and quantity q* without price discrimination. Compare them to the answers in (a) (c) Compare total welfare with and without price discrimination. Explain your answer.
(3rd Degree Price Discrimination) Consider a monopolist serving two identifiably distinct markets with no resale possible,...
(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)...
28. A monopolist faces two separate demand curves in two separate markets: P1 = 78 -...
28. A monopolist faces two separate demand curves in two separate markets: P1 = 78 - 3Ql and P2 = 86 - 2Q2. The total cost curve is TC = 6 + 6Q. Find Q1, Q2, P1, P2, the price elasticities at the two profit maximizing points, and the Lerner Index at the two profit maximizing points.
A monopolist sells in two markets that have demand functions given by D1 (p1) = 100...
A monopolist sells in two markets that have demand functions given by D1 (p1) = 100 - p1 and D2 (p2) = 100 - (1/2) p2: The marginal cost of production is constant at c = 20. (a) Assume the Örm charges di§erent prices to each group. What will be the equilibrium quantities in markets 1 and 2? (b) What market pays a higher price? Why?
Suppose there are two firms in a market who each simultaneously choose a quantity. Firm 1’s...
Suppose there are two firms in a market who each simultaneously choose a quantity. Firm 1’s quantity is q1, and firm 2’s quantity is q2. Therefore the market quantity is Q = q1 + q2. The market demand curve is given by P = 160 - 2Q. Also, each firm has constant marginal cost equal to 10. There are no fixed costs. The marginal revenue of the two firms are given by: MR1 = 160 – 4q1 – 2q2 MR2...
A monopolist sells in two markets. The demand curve for her product is given by p1...
A monopolist sells in two markets. The demand curve for her product is given by p1 = 120 y1 in the Örst market; and p2 = 105 y2 2 in the second market, where yi is the quantity sold in market i and pi is the price charged in market i. She has a constant marginal cost of production, c = 10, and no Öxed costs. She can charge di§erent prices in the two markets. 1) Suppose the monopolist charges...
Assume a monopolist is able to practice price discrimination in two separate markets. Each market has...
Assume a monopolist is able to practice price discrimination in two separate markets. Each market has a different demand curve for the monopolist’s product: Q1 = 1000 – 4P (Market 1: Maine) Q2 = 1200 – 4P (Market 2: Texas) Let the short-run total cost function for the monopolist be SRTC = 100 + 0.25Q2 a. Find the quantity and price at which the monopolist will sell in each market, and figure out the firm’s total profits from the combined...
Suppose that the monopolist gas producer UPEC operates in two distinct markets and charges customers in...
Suppose that the monopolist gas producer UPEC operates in two distinct markets and charges customers in each market a different price (i.e., practicing third-degree price discrimination). In addition, suppose that in producing gas, UPEC incurs a fixed cost of $10 and a variable cost of 2Q. The (separate) demand functions are given by:  Demand for gas among Group 1: P1 = 24 – Q1  Demand for gas among Group 2: P2 = 10 – 0.5Q2 A. Find the...
Assume a monopolist can produce at constant average and marginal costs of AC=MC=5, and sells its...
Assume a monopolist can produce at constant average and marginal costs of AC=MC=5, and sells its goods in two different markets separated by some distance. The demand in the first market is given by Q1= 55 - P1 and the demand in the second market is given by Q2 = 70 - 2P (a) If the monopolist can maintain the separation between the two markets, what level of output should be produced in each market, and what’s the price charged...