A monopolist operates in 2 markets. The demand curve for market 1 is Q₁ = 600-3P1while the demand curve for market 2 is Q2 = 600 - 2P2 Assume that marginal costsis the same in both markets and constant at 20. If the monopolist can practise 3rddegree price discrimination then the profit maximising prices and quantities in eachmarket will beQ1-180, P1-110. Q2-240, P2=260Q1-100, P1-140, Q2-150, P2-180.Q1-270, P1-110. Q2-240, P2=260Q1-270, P1-110. Q2-280, P2=160Q1=180, P1=110. Q2-140, P2=230

The objective of the question is to find the profit maximizing prices and quantities in each market…

Answered: A monopolist operates in 2 markets. The…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Dollars P3 P₂ P4 0 P3 P2 MC P1 P4 ATC Refer to the above diagram for a pure monopolist. Suppose a regulatory commission is created to determine a legal price for the monopoly. If the commission seeks to provide the monopolist with a "fair return," it will set price at: D Q3 Q₁ Q₂ Quantity Q1 Q2 MR
There are two types of consumers: one half of consumers are type 1 (low type) and the other half are type 2 (high type). Type l's demand curve is q1 = 4 – P, while type 2's demand is given by q2 = 6 – P. Consider a monopolist selling its product to these consumers. Assume that the marginal cost is equal to zero. However, the firm does not know an individual consumer's type. It only knows that there are two types of consumers with demand curves given as above. Suppose that the firm can offer only a single two-part tariff, (T, P), where T is the lump-sum fee and P is the unit price. (1) T and P? Also, compute the resulting profit. If the firm serves only high type consumers, what should be the optimal two-part tariff, If the firm serves both types of consumers, what is the firm's profit when it offers (T, P)? (2) Find the expression in terms of P only. (3) well as the resulting profit. Compute P that maximizes the firm's profit in (2). Also, compute the optimal T, as (4) tariff will be…
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Suppose a monopolist knows it has two types of customers. The inverse demand for the customers in the first market is P = 60 – Q while the inverse demand for the customers in the second market is P = 50 – 2Q. The marginal cost is €10 in both markets. Suppose the firm wishes to charge a two-part tariff to its customers but it cannot distinguish between the customers in the first and second markets. Calculate the entry (fixed) fee that the firm should charge in these circumstances.
A monopolist is selling sneakers to students and non-students. The marginal cost of an extra pair of sneakers is 7$. Student demand is Q=189-P and no student demand is Q=400-2P. Right now they act as a single-price monopolist for the entire market. If they decide to do group price discrimination, what will be the CHANGE in prices for students?
A monopolist has a constant marginal cost of £2 per unit and no fixed costs. He faces two separate markets in the United States and in the UK. The goods sold in one market are never resold in the other. He sets one price P1 for the US market and another price P2 for the UK market (both measured in £). The demand in the United States is given by Q1=7,000-700P1 and the demand in the UK is given by Q2=1,200-200P2. Calculate the profit maximising output produced and price charged in each country by the price-discriminating monopolist and comment in which country the price charged is higher and by how much.
A profit maximizing monopolist has a cost function C (q) = q,where q > 0 denotes the amount produced, and faces the aggregate demand curve q = 100/p² where p > 0 denotes the price per unit in the market. Assume that the monopolist chooses an optimal price in the range p E [1, 3]. The optimal price the monopolist would set up is while the Lerner index is_ Blank # 1 Blank # 2
Suppose the monopolist with a marginal cost of 2 is facing two of customers i = {L, H} with the following demand functions: Customer H: qH Customer L: qL = = 6- PH 4- PL The consumer's total payment T;(q) is T;(q) = A; + piq with lump sum payment A and per unit price p. = a. Assume that the monopolist can distinguish between the two groups of consumers. Further, suppose that A₁ 0, meaning the monopolist is charging uniform prices. Find the profit maximizing price the monopolist charges customer H and the price the monopolist charges customer L. b. Assume that the monopolist can perfectly distinguish between the two groups of consumers and can utilize a lump sum payment A¡ > 0. Find the two part tariff the monopolist charges customer H and the two part tariff charged to customer L.
Suppose that monopolist faces the following demand curve: P = 80-3Q. Monopolist operates in two plants with the following cost functions: TC, = 2q, + an output in each plant. %3D and: TC, 12qh+q%. Find the optimum %3D 9, = 12 and q, = 13 9 = 4 and 4, = 1 91 = 6 and 92 = 4 Oq = 8 and q2 = 7
A discriminating monopolist is able to charge different prices in two different markets. Assume that the quantity demanded at a given price is always greater in market 1 than the quantity demanded in market 2. Therefore, we know that the price in market 1 will be greater than the price in market 2. True or False?
Economics A market comprises two consumers groups: high- demand types and low-demand types. Assume there are 100 consumers of each type. The high types have demand QH = 14 – Pand low types have demand QL = 12 – P. Assume the marginal (and average) cost is 4 and there are no fixed costs. If the monopolist firm is able to distinguish between the two consumer types and using block pricing to extract maximum profit, how much profit will they earn in total? Select one: а. 9000 b. 6800 С. 8200 d. 7200

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