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Consider a monopolistic firm selling the same product in two completely separate markets (market A and market B) with the following demand schedules (BTW: assume

Consider a monopolistic firm selling the same product in two completely separate markets (market A and market B) with the following demand schedules (BTW: assume that the numbers given are based continuous linear demand curves in each market):

PA 90 80 70 60 50 40 30 20 10 0
QA 0 1 2 3 4 5 6 7 8 9
PB 70 60 50 40 30 20 10 0
QB 0 1 2 3 4 5 6 7

The marginal cost of this firm is equal to its average total cost and is constant at $20 per unit produced (note that this also means that there are no fixed costs). Based on this information use excel to calculate marginal revenues and set up diagrams that show the demand and the marginal revenue curves of this firm in each market, as well as the quantities and prices it should charge in these markets in order to maximize overall profits. (BTW: As you set up your diagrams, remember that marginal values should be placed in the middle of the range over which the marginal value is calculated).

Include your diagrams and calculations in an essay about the nature of price discrimination by Monopolies. Make sure that you include the total profit (i.e., the combined profit from the two markets) as a part of your answer and explain why exactly the firm should charge different prices in the two markets in order to maximize total profit. Also, as part of your answer, give at least 3 specific examples of price discrimination that is commonly seen from sellers with market power.

Here is an excel spreadsheet file with two examples that include the kind of diagrams, etc., that I am looking for here. The 1st example in this file has demand schedules similar to what you are looking at for Assignment 10, and 2nd example has linear demand formulas looking at the same kind of problem based on demand formulas rather than demand schedules.

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