A monopolist operates in two cities, A and B, and may choose different quantities and prices in each city. The cost function based on total production q = q₁+qB is C(q) = q+0.5q²+q³. There are no shipping costs. Demand in each city is QA (PA) = 2p₁₁ and QB(PB) = PB². If the monopolist maximizes profits, what is the ratio of prices PA/PB? (a) PA/PB = 3/6 (b) PA/PB = 5/6 (c) PA/PB = 8/5 (d) PA/PB = 4/7 (e) None of the options above.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

**Practice**

A monopolist operates in two cities, A and B, and may choose different quantities and prices
in each city. The cost function based on total production q = q₁+qB is C(q) = q+0.5q²+q³.
There are no shipping costs. Demand in each city is QA (PA) = 2p₁₁ and QB(PB) = PB². If
the monopolist maximizes profits, what is the ratio of prices PA/PB?
(a) PA/PB = 3/6
(b) PA/PB = 5/6
(c) PA/PB = 8/5
(d) PA/PB = 4/7
(e) None of the options above.
Transcribed Image Text:A monopolist operates in two cities, A and B, and may choose different quantities and prices in each city. The cost function based on total production q = q₁+qB is C(q) = q+0.5q²+q³. There are no shipping costs. Demand in each city is QA (PA) = 2p₁₁ and QB(PB) = PB². If the monopolist maximizes profits, what is the ratio of prices PA/PB? (a) PA/PB = 3/6 (b) PA/PB = 5/6 (c) PA/PB = 8/5 (d) PA/PB = 4/7 (e) None of the options above.
Expert Solution
steps

Step by step

Solved in 1 steps

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education