4. 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 cach 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. (c) Now suppose this monopolist is mandated to charge the same price on each market (or that it is now costless for consumers to buy from any of the markets). What will be the profit-maximizing uniform price charged by the monopolist?

4. 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 cach 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. (c) Now suppose this monopolist is mandated to charge the same price on each market (or that it is now costless for consumers to buy from any of the markets). What will be the profit-maximizing uniform price charged by the monopolist?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter9: Monopoly

Section: Chapter Questions

Problem 31P: Return to Figure 9.2. Suppose P0 is 10 and P1 is 11. Suppose a new firm with the same LRAC curve as...

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