N5

Multiproduct Monopoly: 6. Consider a monopolist that produces for two periods. The demand curves in both periods are: yi(P]) = 1 -P1 yz(Pz) = 1 -pz The total cost functions are given by C, (y,) = 0.5y, in the first period, and C2()/2, M) = (0.5 - 0.5y,)yz in the second period. (Hence, there is learning by doing since acz(yz, y1)/dy, = -0.5yz