QUESTION 1

A producer has the possibility of discriminating between the domestic and foreign market for a product where the demands respectively are: Q1 = 20 - 0.2P1 Q2 = 13.5 - 0.25P 2 Total cost= 45+30Q, where Q= Q1+Q2 a) What price will the producer charge in order to maximize profits? i) With discrimination between markets ii) Without discrimination between markets. b) Compare the profit differential between discrimination and non-discrimination. Round all intermediate and final answers to the nearest cent, 2 d.p. Market 1 Market 2 Q1=20-0.2P1 Q2=13.5-0.25P 2 1. TR1= TR2= X Q1- X Q2- X Q2 X Q2 2. MR1= MR2= X X X Q1 X Q2 3. MC= MC= X X 4. Q1= Q2= X X 5. P1=$ P2=$ X X6. TRIMAX = $ TR2MAX= $ X X 7. TC=$ SAME X 8. Combined TRmax= $ SAME X TPmax=$ X ii) Without price discrimination: Use fractions in reduced form, if not terminating decimals. Q= X x P can use decimals P= X * Q use fractions in reduced form 1.TR= X Q- X Q2 2.MR= X - X Q 3. MC= X 4. Q= X"U || 6'} a: round to the nearest cent 6. TRmax=$ U a: round to the nearest cent 7. TC:$ \"D 8- Tpmax=$ U a: round to the nearest cent b) Compare the profit differential between discrimination and non-discrimination. Round all intermediate and final answers to the nearest cent, 2 do Profit differential between discrimination and non- discrimination: $ \"D For the give demand function 423Q=2P and the price, P=$6 1. Find the price elasticity of the demand function at the indicated values of price. E: it round to 1 d.p. 2.Find the absolute value of price elasticity. |E|= E it round to 1 d.p. 3. Is it: elastic inelastic unitary elasticity 4. A1% increase in price will cause E x % decrease increase in quantityr of demand. 5. A 5% decrease in price will cause D x % decrease increase in quantity of demand. 6. Consider the price of $6. If price decreases by 10%: a} What is the corresponding percent change in the quantity of demand? Quantity of demand will decrease increase \"D x %. b} What is the new price? $ E a: round to the nearest cent. c} What is the new quantity of demand? 3 round to 1 d.p. For the give demand function 'IDQ+5P- 40:0 and the price. P=$4 1.Find the price elasticity of the demand function at the indicated values of price. :::| 2.Find the absolute value of price elasticity. IEI: r. 3.|Sit: elastic inelastic unitary elasticity 4. A 1% increase in price will cause x % decrease increase in quantity of demand. 5. A12% decrease in price will cause U n \"/3 decrease increase in quantity of demand. 6. Consider the price of $4. If price increases by 30%: a) What is the corresponding percent change in the quantity of demand? Quantity of demand wiil decrease increase by 8 %. b) What is the new price? $ E a: round to the nearest cent. c) What is the new quantity of demand? E a round to 'l d.p. For the give demand function Q=7"5'I0P2 and the price, P=$2 1.Find the price elasticity of the demand function at the indicated values of price. E: E it round to 1 d.p. 2.Find the absolute value of price elasticity. lEl: E it round to 1 d.p. 3. Is it: elastic inelastic unitary elasticity 4. A1% decrease in price will cause E x % decrease increase in quantity of demand. 5. A15% increase in price will cause E x % decrease increase in quantity of demand. 6. Consider the price of $2. If price increases by 20%: a) What is the corresponding percent change in the quantity of demand? Quantity of demand will increase decrease by x %. b} What is the new price? $ E a round to the nearest cent. c) What is the new quantity of demand? E a round to 1 d.p