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A firm is allowed to charge different prices for its domestic and industrial customers. If P, and Q denote the price and demand for the
A firm is allowed to charge different prices for its domestic and industrial customers. If P, and Q denote the price and demand for the domestic market then the demand equation is P, + Q, = 500 If P. and Q, denote the price and demand for the industrial market then the demand equation is 2P, + 302 = 720 The total cost function is TC = 50 000 + 200 where Q = Q, + 0,. Determine the prices (in dollars) that the firm should charge to maximise profits:(a) with price discrimination (b) without price discrimination. Compare the profits obtained in parts (a) and (b)
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