Answered step by step
Verified Expert Solution
Question
1 Approved Answer
need a help with this, please 3. (35 points) A monopolist sells in 2 markets and produces in 1 factory. Although the monopolist can charge
need a help with this, please
3. (35 points) A monopolist sells in 2 markets and produces in 1 factory. Although the monopolist can charge difference prices in the two markets, it must sell all units within a market at the same price. a) Suppose this monopolist does not have a marginal cost (MC = 0). If demand in market 1 is X1(P) = 2, - bP and demand in market 2 is X2(P2) = 12 - b2P2, set up the monopolist's profit maximization problems and solve for the market prices that result in each market. b) Under what conditions on a, b, az.b, from above will the monopolist not price discriminate? c) If demand in market i, where i = 1,2, is instead X (p:) = aip, and the monopolist has some constant marginal cost of c, where e > 0, set up the monopolist's profit maximization problem and solve for the market prices. d) Under what conditions on a, b, 42, b) from above will the monopolist not price discriminate? 3. (35 points) A monopolist sells in 2 markets and produces in 1 factory. Although the monopolist can charge difference prices in the two markets, it must sell all units within a market at the same price. a) Suppose this monopolist does not have a marginal cost (MC = 0). If demand in market 1 is X1(P) = 2, - bP and demand in market 2 is X2(P2) = 12 - b2P2, set up the monopolist's profit maximization problems and solve for the market prices that result in each market. b) Under what conditions on a, b, az.b, from above will the monopolist not price discriminate? c) If demand in market i, where i = 1,2, is instead X (p:) = aip, and the monopolist has some constant marginal cost of c, where e > 0, set up the monopolist's profit maximization problem and solve for the market prices. d) Under what conditions on a, b, 42, b) from above will the monopolist not price discriminate Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started