Question

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 + 0.25Q^{2}

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 markets.

b.Examine the case where the monopolist cannot price discriminate. Find the price and quantities at which it will sell, and the firm’s total profit. Comment on the difference in results.

Answer #1

(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)...

Question #4
(3rd Degree Price Discrimination)
A Monopolist selling a cell phone in two separate markets. They
must decide how much to sell in each market in order to maximize
their total profits.
The demand in the Brazilian Market is
:
QBrazil = 200 – 10PBrazil
The demand in the United States Market
is:
QUSA = 60 – 20PUSA
If Total Cost is: TC = 90 + 2(QUSA
+QBrazil)
Calculate the Price and Quantity if the Monopolist Maximized...

A firm is selling its product in two markets. In market A the
demand is given by QA = 100 − 2P and in market B the demand is QB =
80 − 4P. The firm’s total cost is C = 10Q where Q = QA + QB is the
total output. a) Suppose the monopolist cannot discriminate between
markets A and B. What is the total demand ? (1 pt) Find the
profit-maximizing price and quantity (2 pt), and...

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.

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)...

2. Say a monopolist sells in two separate markets, with demand
PA = 30 - 2Q (that is, the MRA = 30 – 4Q) and PB = 40 - Q (that is,
the MRB = 40 – 2Q), respectively. Marginal costs in both markets
are constant and equal to 10. What are the prices and quantities
that the monopolist would charge in each market to maximize profit.
(4 pts) Show your work.
3. A monopolist has marginal costs MC =...

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.

Suppose a monopolist practices price discrimination in selling
his product, charging different prices in two separate markets. In
the market A the demand function is PA =
100-qA and in B it is PB = 84-qB,
where qA and qB are the quantities sold per
week of A and B, PA and PB are the
respective prices per unit . If the cost function of the monopolist
is c = 600 + 4 (qA + qB)
A.How much should be sold...

Assume that a pure monopolist is
able to engage in perfect price discrimination and sell each unit
of the product at a price equal to the maximum price the buyer of
that unit of the product would be willing to pay. Complete the
table below by computing total revenue and marginal revenue for the
price discriminating monopolist.
Total
Marginal
Total
Marginal
Quantity
Price
revenue
revenue
cost
cost
0
$34
$______
$ 20
1
32
______
$______ ...

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...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 7 minutes ago

asked 8 minutes ago

asked 20 minutes ago

asked 26 minutes ago

asked 26 minutes ago

asked 42 minutes ago

asked 49 minutes ago

asked 50 minutes ago

asked 54 minutes ago

asked 55 minutes ago

asked 1 hour ago

asked 1 hour ago