Assume you are the Director of Marketing for Majjus Enterprise, a firm that produces a new product called African Solar. Your company sells to two distinct geographical markets-East Legon and Nima. Majjus Enterprise is described as a monopolist and has the possibility of discriminating between its East Legon and Nima Markets. In order to derive the maximum profit from the production process, you engaged the services of an Econometrician, who estimated the demand functions for both East Legon and Nima markets to be: Q1 = 24-0.2P₁ East Legon Market Q2 = 10-0.05P2 Nima Market Where Q1 and Q₂ are the respective quantities of African Solar demanded in the East Legon and Nima markets and P₁ and P₂ are their respective prices (in GH¢). If the Total Cost (TC) of Majjus Enterprise for producing African Solar for these two markets is given as TC = 35 + 400, where Q = Q1 + Q₂. i. What profit will Majjus Enterprise make with and without price discrimination? 11. What business advice will you give in respect of practicing price discrimination or selling a uniform price? iii. If price discrimination is the option to implement within the context of elasticity of domond what pr ou should be implemented in gach m co total fottono?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
Assume you are the Director of Marketing for Majjus Enterprise, a firm that produces a new product
called African Solar. Your company sells to two distinct geographical markets-East Legon and
Nima. Majjus Enterprise is described as a monopolist and has the possibility of discriminating
between its East Legon and Nima Markets. In order to derive the maximum profit from the
production process, you engaged the services of an Econometrician, who estimated the demand
functions for both East Legon and Nima markets to be:
Q1 24-0.2P1
Q2 = 10-0.05P2
East Legon Market
Nima Market
Where Q1 and Q2 are the respective quantities of African Solar demanded in the East Legon and
Nima markets and P₁ and P₂ are their respective prices (in GH¢). If the Total Cost (TC) of Majjus
Enterprise for producing African Solar for these two markets is given as TC = 35 + 400, where Q
= Q1 + Q₂.
i.
What profit will Majjus Enterprise make with and without price discrimination?
ii.
What business advice will you give in respect of practicing price discrimination or selling
a uniform price?
111.
If price discrimination is the option to implement within the context of elasticity of
demand, what pricing policy should be implemented in each market to raise total revenue?
Transcribed Image Text:Assume you are the Director of Marketing for Majjus Enterprise, a firm that produces a new product called African Solar. Your company sells to two distinct geographical markets-East Legon and Nima. Majjus Enterprise is described as a monopolist and has the possibility of discriminating between its East Legon and Nima Markets. In order to derive the maximum profit from the production process, you engaged the services of an Econometrician, who estimated the demand functions for both East Legon and Nima markets to be: Q1 24-0.2P1 Q2 = 10-0.05P2 East Legon Market Nima Market Where Q1 and Q2 are the respective quantities of African Solar demanded in the East Legon and Nima markets and P₁ and P₂ are their respective prices (in GH¢). If the Total Cost (TC) of Majjus Enterprise for producing African Solar for these two markets is given as TC = 35 + 400, where Q = Q1 + Q₂. i. What profit will Majjus Enterprise make with and without price discrimination? ii. What business advice will you give in respect of practicing price discrimination or selling a uniform price? 111. If price discrimination is the option to implement within the context of elasticity of demand, what pricing policy should be implemented in each market to raise total revenue?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

Blurred answer
Knowledge Booster
Econometric Model
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.
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