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a monopolist produces a good at zero cost and sells it at linear prices in two markets, A and B, whose demand is given by
a monopolist produces a good at zero cost and sells it at linear prices in two markets, A and B, whose demand is given by q_a=10-p and q_b= 6-p. i) Assume the firm charges a different price in each market. Find the equilibrium prices and quantities in A and B, and total profits. ii) Assume the firm charges the same price in both markets. Find aggregate demand (hint: sumup the demand in the two markets at the same price). Find the equilibrium prices and quantities in A and B, and total profits. iii) Calculate aggregate consumers' surpuls in cases i) and ii). Do consumers prefer when the firm discriminate across markets? iv) Does the firm prefer to discriminate across markets? Demand in market B reduces to q_b=2-p. v) Assume the firm charges the same price in both markets. Find the aggregate demand. Find the equilibrium prices and quantities in A and B, and total profits (hint: you should make sure that the firm sells a nonnegative quantity in each market).
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