Consider two markets for the same good: markets 1 and 2. The demand for the good on these markets are: P₁ = 20-2Q₁ and P2 = 40 - 2Q2 The total cost of producing any output Q is c(Q) = 10 +8Q where Q = 91 +92. (a) Suppose these two markets are completely separated but each is served by a per- fectly competitive industry. What will be the prices and outputs supplied to cach of the two markets? (a) Now instead of (a), suppose these two markets are served by a single price- discriminating monopolist. If the markets continue to be separated, what are the profit-maximizing prices charged by the monopolist and outputs. Confirm that the market with the less elastic demand is charged the higher price.

Consider two markets for the same good: markets 1 and 2. The demand for the good on these markets are: P₁ = 20-2Q₁ and P2 = 40 - 2Q2 The total cost of producing any output Q is c(Q) = 10 +8Q where Q = 91 +92. (a) Suppose these two markets are completely separated but each is served by a per- fectly competitive industry. What will be the prices and outputs supplied to cach of the two markets? (a) Now instead of (a), suppose these two markets are served by a single price- discriminating monopolist. If the markets continue to be separated, what are the profit-maximizing prices charged by the monopolist and outputs. Confirm that the market with the less elastic demand is charged the higher price.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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