Question #4

(3rd Degree Price Discrimination)

A Monopolist sells beer in two separate markets. They must decide how much to sell in each market in order to maximize their total profits.

The demand in the Canadian Market is : QCanada = 1120 - 10PCanada

The demand in the United States Market is: QUSA = 660 - 20PUSA

MC = MR

If Total Cost is: TC = 10 + 5(QUSA +QCanada)

A. Calculate the Price and Quantity if the Monopolist Maximized their profit and sells in both markets? (8 Points)

B. Calculate the Profit if he Monopolist Maximized their profit and sells in both markets? (6 Points)

C. In the absence of 3rd Degree Price Discrimination and the firm must sell at the same price in both markets, what is the price, quantity and total profit? (6 Points)