Question
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.)
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