Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A monopolist firm faces demand from two groups. Group A has demand QA = 100 - 8pA and thus MR = (1/8)*(100 - 2QA). Group

A monopolist firm faces demand from two groups. Group A has demand QA = 100 - 8pA and thus MR = (1/8)*(100 - 2QA). Group B has demand and QB = 100 - 4pB and thus MR = (1/4)*(100 - 2QB). The monopolist has a cost function C(Q) = 2QA + 2QB and marginal cost MC = 2. The equation for marginal revenue from a combined demand curve is MR = 50/3 - Q/6. a. If the firm can not price discriminate, what is the optimal (from the firm's perspective) price and quantity? How much profit does the firm make? b. If they are allowed to price discriminate, what are the optimal prices and quantities for each group? How much profit does the firm make?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Energy, Trade And Finance In Asia A Political And Economic Analysis

Authors: Justin Dargin, Tai Wei Lim

1st Edition

1317322711, 9781317322719

More Books

Students also viewed these Economics questions

Question

2. Find five metaphors for communication.

Answered: 1 week ago