Question
he following information is relevant to problems (7-9 ). Suppose there is a price setting firm selling the same good in two different markets and
he following information is relevant to problems (7-9 ).
Suppose there is a price setting firm selling the same good in two different markets and that able to successfully prevent resale from one market to the other. The direct demand functions for the two markets are given by the following two equations:
Q1 = 12-P1andQ2 = 8-P2
and the common Total Cost function is given by TC = 5 +2(Q1+Q2) where
Qtotal=Q1+Q2
7.This profitmaximizing price discriminating firm will charge the following prices in the two markets:
a.P1=5P2 =3
b.P2=3P1=5
c.P1=7 P2=5
d.P1=5 P2 =7
e.None of the above
8.This price discriminating firm will sell the following quantities in the two markets:
a.Q1=7, Q2=5
b.Q1=5, Q2=7
c.Q1=5, Q2=3
d.Q1=3. Q2=5
e.None of the above
9. TFThe market that has the higher elasticity of demand is market 2.
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