A monopolist is operating in two market segments where the inverse demands are P1 = 36 – 1.5Q, and P2 = 30 – Q2. The monopolist's total cost is TC = 50 + 6(Q1 + Q2). a) If the monopolist can price discriminate what are the profit-maximizing prices and quantities for each of the two markets? How much profit does the monopolist make? b) How much profit would fall if price discrimination is not feasible? c) If the monopolist were able exercise first degree price discrimination in the combined market what would be its profit?

A monopolist is operating in two market segments where the inverse demands are P1 = 36 – 1.5Q, and P2 = 30 – Q2. The monopolist's total cost is TC = 50 + 6(Q1 + Q2). a) If the monopolist can price discriminate what are the profit-maximizing prices and quantities for each of the two markets? How much profit does the monopolist make? b) How much profit would fall if price discrimination is not feasible? c) If the monopolist were able exercise first degree price discrimination in the combined market what would be its profit?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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A monopolist is operating in two market segments where the inverse demands are
P1 = 36 – 1.5Q, and P2 = 30 – Q2. The monopolist's total cost is TC = 50 + 6(Q1 + Q2).
a) If the monopolist can price discriminate what are the profit-maximizing prices and quantities for
each of the two markets? How much profit does the monopolist make?
b) How much profit would fall if price discrimination is not feasible?
c) If the monopolist were able exercise first degree price discrimination in the combined market
what would be its profit?

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