Suppose that a monopolist faces two markets with demand curves given by: D1 (p1 ) = 100 – p1 D2 (p2) = 100 – 2p2 And also assume that the monopolist’s marginal cost is constant at $20 a unit. 1. If the monopolist can price discriminate, what price should the firm charge in each market in order to maximize profits? 2. Suppose the firm cannot price discriminate, what price should it charge?
Suppose that a monopolist faces two markets with demand curves given by: D1 (p1 ) = 100 – p1 D2 (p2) = 100 – 2p2 And also assume that the monopolist’s marginal cost is constant at $20 a unit. 1. If the monopolist can price discriminate, what price should the firm charge in each market in order to maximize profits? 2. Suppose the firm cannot price discriminate, what price should it charge?
Chapter25: Monopoly
Section: Chapter Questions
Problem 14E
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Question
Suppose that a monopolist faces two markets with demand
D1 (p1 ) = 100 – p1
D2 (p2) = 100 – 2p2
And also assume that the monopolist’s marginal cost is constant at $20 a unit.
1. If the monopolist can
market in order to maximize profits?
2. Suppose the firm cannot price discriminate, what price should it charge?
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