Question
A monopolistic firm faces the following demand curve. Q = 9,000 -10 P This monopoly's cost function has been estimated as follows: TC = 480,000
A monopolistic firm faces the following demand curve. Q = 9,000 -10 P This monopoly's cost function has been estimated as follows: TC = 480,000 + 40 Q a. What price should this monopoly charge to maximize its profit? b. What would be its equilibrium profit? c. What price should it charge if it were to maximize its revenue? d. What would be its profit if it maximized its revenue? e. If this monopoly were to behave like a competitive firm, what price should it charge and what quantity should it produce? f. Would this monopolist still make an economic profit if it were to behave like a competitive firm? g. What is the break-even quantity of this monopoly?
h. Now suppose this monopoly acquires access to another (separate) market with the following demand curve:
Q2 = 10,000 - 5 P2 The company can keep the two markets separate and prevent reselling between them. Determine if the company can price discriminate between the two markets and if so, what price could it charge in the second market?
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