A monopolist has two segmented markets with demand curves given by P1 = 160- Q1 and...

A monopolist has two segmented markets with demand curves given by

P1 = 160- Q1 and P2 = 130 - 0.5Q2

where p1 and p2 are the prices charged in each market segment, and Q1 and Q2 are the quantities sold. Its cost function is given by c(Q) = 2Q2, where Q = Q1 + Q2.

a. What type of price discrimination does this entail?

b. Find the monopolist's profit-maximizing price and quantity for each segment.

c. What is the relative price markup for each segment?

d. Find the profit for the monopoly.

e. Find the elasticity of demand for both demand functions.

f. From b, which segment should be charged a higher price?

Solutions

Expert Solution

Rahul Sunny answered 2 weeks ago

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