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A monopolist sells in two markets.




0607. (i) A monopolist sells in two markets. The demand curve for her product is given by p1 = 122 ? 2x1 in the first market and p2 = 306 ? 5x2 in the second market, where xi is the quantity sold in market i and pi is the price charged in market i. She has a constant marginal cost of production, c = 6, and no fixed costs. She can charge different prices in the two markets.;a) What is the profit-maximising quantity in each market for this monopolist?;b) What profit is this monopolist making?;c) Contrast this to a situation where the monopolist is only permitted to charge a single price to both markets. What will this price be, and how much profit will the monopolist make?


Paper#28569 | Written in 18-Jul-2015

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