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Consider two distinct markets for a particular service. In market 1, the service is demanded by 40 identical a consumers. Each consumer in market 1
Consider two distinct markets for a particular service. In market 1, the service is demanded by 40 identical a consumers. Each consumer in market 1 has a demand function represented by: p = 10 - qi. In market 2, the service is demanded by 20 identical consumers. Each consumer in market 2 has a demand function represented by: p = 4 - 25qi. Both markets are served by a single firm with the following total cost function: TC (q) = 2q. = 1) Assume the monopolist firm can keep the two markets separated. For each market, give the aggregate demand function. In each market find the profit maximizing price and output level for the monopolist. What are the CS, PS, and DWL for each market? (10 possible points)
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