Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A monopoly firm faces two markets where the inverse demand curves are MarketA: PA=1402.75QA, MarketB: PB=120QB. The firm operates a single plant where total cost

A monopoly firm faces two markets where the inverse demand curves are

MarketA: PA=1402.75QA,

MarketB: PB=120QB.

The firm operates a single plant where total cost is C= 20Q+0.25Q2, and marginal cost is m= 20+ 0.5Q.

Suppose the firm sets a single price for both markets. Using the informationabove, the profit maximizing price is$86.18 and the profit maximizing quantity is 53.37 units.

Given thisinformation, you determine that the firm will earn a profit of $281.94

Now suppose the firm is able to engage in group price discrimination. To maximizeprofits, the firm will produce .... units for market A and charge customers in market A a price of $ .... per unit. And it will produce .... units for market B and charge customers in market B a price of $ .... per unit. (Round your responses to two decimalplaces.)

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

Intermediate Microeconomics and Its Application

Authors: walter nicholson, christopher snyder

11th edition

9781111784300, 324599102, 1111784302, 978-0324599107

More Books

Students also viewed these Economics questions

Question

What is order of reaction? Explain with example?

Answered: 1 week ago

Question

Derive expressions for the rates of forward and reverse reactions?

Answered: 1 week ago