2. Pindyck & Rubinfeld, 8e. Ch. 11, #5. A monopolist is deciding how to allocate output between two geographically separated markets (East Coast and Midwest). Demand and marginal revenue for the two markets are: P1 = 15 − Q1 MR1 = 15 − 2Q1 P2 = 25 − 2Q2 MR2 = 25 − 4Q2 The monopolist’s total cost is C = 5 + 3 (Q1 + Q2). What are the price, output, profits, and deadweight loss (i) if the monopolist can price discriminate? (ii) if the law prohibits charging different prices in the two regions?

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