Consider a monopolist that sells in two separated markets. The inverse demand curve in market 1 is given by P₁ = 800-20₁ and the inverse demand curve in market 2 is given by P₂ = 600 - Q₂- The firm's total cost function is given by TC(Q) = Q², where Q Q₁+Q₂. Since the two markets are totally separated, and any resale opportunity is not there, the monopolist wants to maximize the profit by charging different prices. (a) What is this pricing strategy called? (b) Find the profit-maximizing quantities (Q₁, Q;) for each market. (e) Find the profit-maximizing prices (Pi, Pi) for each market.
Consider a monopolist that sells in two separated markets. The inverse demand curve in market 1 is given by P₁ = 800-20₁ and the inverse demand curve in market 2 is given by P₂ = 600 - Q₂- The firm's total cost function is given by TC(Q) = Q², where Q Q₁+Q₂. Since the two markets are totally separated, and any resale opportunity is not there, the monopolist wants to maximize the profit by charging different prices. (a) What is this pricing strategy called? (b) Find the profit-maximizing quantities (Q₁, Q;) for each market. (e) Find the profit-maximizing prices (Pi, Pi) for each market.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Consider a monopolist that sells in two separated markets. The inverse demand curve in market 1
is given by
P₁ = 800-2Q₁,
and the inverse demand curve in market 2 is given by
P₂ = 600-Q₂-
The firm's total cost function is given by
TC(Q) = Q²,
where Q = Q₁+Q2. Since the two markets are totally separated, and any resale opportunity is
not there, the monopolist wants to maximize the profit by charging different prices.
(a) What is this pricing strategy called?
(b) Find the profit-maximizing quantities (Q₁,Q) for each market.
(c) Find the profit-maximizing prices (P₁, Pi) for each market.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fe0e777ab-c514-4163-8f7b-2f1ace01003d%2F7abe2880-0a29-4304-b597-dc65c0dfb1dd%2F1cutd0d_processed.png&w=3840&q=75)
Transcribed Image Text:Consider a monopolist that sells in two separated markets. The inverse demand curve in market 1
is given by
P₁ = 800-2Q₁,
and the inverse demand curve in market 2 is given by
P₂ = 600-Q₂-
The firm's total cost function is given by
TC(Q) = Q²,
where Q = Q₁+Q2. Since the two markets are totally separated, and any resale opportunity is
not there, the monopolist wants to maximize the profit by charging different prices.
(a) What is this pricing strategy called?
(b) Find the profit-maximizing quantities (Q₁,Q) for each market.
(c) Find the profit-maximizing prices (P₁, Pi) for each market.
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