Suppose a monopolist M sells two products, X and Y. • Demand for X is qX = 1000 − pX − 1/2pY • Demand for Y is qY = 1000 − pY − 1/2pX a) If the marginal costs of both X and Y are zero, what are profit maximizing prices? b) If X was sold by a separate firm, but at the same price as you found in b, would M raise or lower its price for X?
Suppose a monopolist M sells two products, X and Y. • Demand for X is qX = 1000 − pX − 1/2pY • Demand for Y is qY = 1000 − pY − 1/2pX a) If the marginal costs of both X and Y are zero, what are profit maximizing prices? b) If X was sold by a separate firm, but at the same price as you found in b, would M raise or lower its price for X?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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1. Suppose a monopolist M sells two products, X and Y.
•
• Demand for Y is qY = 1000 − pY − 1/2pX
a) If the marginal costs of both X and Y are zero, what are profit maximizing prices?
b) If X was sold by a separate firm, but at the same
price for X?
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