Question

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 = ___________________________________

Answer #1

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 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.

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.

(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)...

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?

You are the manager of a firm that produces output in two
plants. The demand for your firm's product is P = 120 − 6Q, where Q
= Q1 + Q2. The marginal costs associated with
producing in the two plants are MC1 = 2Q1 and
MC2 = 4Q2.
Please explain and show all steps in deriving the answers, thank
you!
a. How much output should be produced in plant 1 in order to
maximize profits? Answer: 6
b. What...

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...

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...

3. (i) A monopolist faces the following demand and total cost
functions: Q1 = 65 -1/2P, TC = Q2 + 10Q + 50
(a) Calculate the profit maximizing output and price of the
monopolist. Calculate the resulting profit. (12 points)
(b) Suppose the government imposes an excise tax of $30 on the
production and sale of the product. Calculate the resulting optimal
profit maximizing output and price for the monopolist. Also
determine the level of profit. (12 points)
(c) If...

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...

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