A monopolist sells a good to two demographically separate markets. The demand for its good in the first market is given by Q1 = 24 – P1, (2) while the demand in the second market given by Q2 = 20 – P2. (3) The monopolist has constant average and marginal costs of $2 per unit. Answer the following: (a) Find the price the monopolist would charge if it sells its good for the same price in both markets. How many units does the monopolist sell in each market? What are its profits? (b) If the monopolist can maintain separation between the two markets, what price would it charge in each market? How many units does it sell in each market? What are its profits?

A monopolist sells a good to two demographically separate markets. The demand for its good in the first market is given by Q1 = 24 – P1, (2) while the demand in the second market given by Q2 = 20 – P2. (3) The monopolist has constant average and marginal costs of $2 per unit. Answer the following: (a) Find the price the monopolist would charge if it sells its good for the same price in both markets. How many units does the monopolist sell in each market? What are its profits? (b) If the monopolist can maintain separation between the two markets, what price would it charge in each market? How many units does it sell in each market? What are its profits?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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