4. Consider two markets for the same good: markets 1 and 2. The demand for the good on these markets are: P₁ = 20 2Q₁ and P2 = 40 - 2Q2 The total cost of producing any output Q is c(Q) = 10 + 8Q where Q = 91 +92. (a) Suppose these two markets are completely separated but cach is served by a per- fectly competitive industry. What will be the prices and outputs supplied to cach of the two markets? (a) Now instead of (a), suppose these two markets are served by a single price- discriminating monopolist. If the markets continue to be separated, what are the profit-maximizing prices charged by the monopolist and outputs. Confirm that the market with the less elastic demand is charged the higher price. (c) Now suppose this monopolist is mandated to charge the same price on each market (or that it is now costless for consumers to buy from any of the markets). What will be the profit-maximizing uniform price charged by the monopolist?

4. Consider two markets for the same good: markets 1 and 2. The demand for the good on these markets are: P₁ = 20 2Q₁ and P2 = 40 - 2Q2 The total cost of producing any output Q is c(Q) = 10 + 8Q where Q = 91 +92. (a) Suppose these two markets are completely separated but cach is served by a per- fectly competitive industry. What will be the prices and outputs supplied to cach of the two markets? (a) Now instead of (a), suppose these two markets are served by a single price- discriminating monopolist. If the markets continue to be separated, what are the profit-maximizing prices charged by the monopolist and outputs. Confirm that the market with the less elastic demand is charged the higher price. (c) Now suppose this monopolist is mandated to charge the same price on each market (or that it is now costless for consumers to buy from any of the markets). What will be the profit-maximizing uniform price charged by the monopolist?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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