Use a cell reference or a single formula where appropriate in order to receive full credit. Do not copy and paste values or type values, as you will not receive full credit for your answers. The Jam Factory makes boutique jams that it sells in specialty stores in two different cities. In City 1, the daily inverse demand function is p1 = 12 - 0.50, and the marginal revenue function is MR, = 12 - Q1- In City 2, the inverse demand and marginal revenue functions are p2 = 20 - Q, and MR, = 20 - 202- The firm's cost function is C(Q) =10 + 60, where Q = Q1 + 02- Thus, the firm's marginal cost of production is 6 per unit. P1 = 12 0.5 Q1 MR1 = 12 Q1 P2 = 20 Q2 MR, = 20 2 Q2 c(Q) 10 + 6Q Q 22 a) Solve for the price and marginal revenue in each city at the corresponding quantities Q = 0, 1, 2, ...12. The Jam Factory price discriminates by charging a different price in each city. Find the profit-maximizing quantities and prices. Verify that the marginal revenues are the same in each city at the profit-maximizing quantities. Determine the firm's profit. b) Calculate the price elasticity of demand in each city for each price-quantity combination. Verify that your results are consistent with Equation 10.5: PB 1+ /SA PA (Hint: The price elasticity of demand for City 1 is $1 = -2p1/@, and for City 2 is =2 = -p1/@2-)E1 = -2 p1/ Q1 = b) Q1 P2 MR MR, MC E1 Ez O 6 6 6 6 9 10 10 OOO 11 11 12 12 6 a) The firm's profit-maximizing output for City 1 is when the price is The firm's profit-maximizing output for City 2 is when the price is The maximum profit for the firm is b) The value of p2p 1 is and it is the value of (1+1/e1)/(1+1/e2) which is