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The Price Discriminating Monopolist Suppose the profit maximizing firm sells the same good in two individual markets that it is able to keep separate. Since
The Price Discriminating Monopolist Suppose the profit maximizing firm sells the same good in two individual markets that it is able to keep separate. Since the price elasticit},r of demand is different in each market, the firm recognizes that rather than charge all customers the same price, it can increase profits by charging different prices in each of the two markets. The demand equations for each market are shown helow: The firm's Total Cost Function is: TC : 50 a} 1What is the optimal output in Market 1? [3 marks] h} 1What price will he charged in Market 1? [2 marks} c] What is the optimal output in Market 2? [3 marks] cl] What price will he charged in Market 2? [2 marks] e] What is the firm's total profit? [3 marks] f} Illustrate your answer. {2 marks] Market 1 Market 2 Total Market
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