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?

Expert Solution

Rahul Sunny answered 6 months ago

Consider a monopolist facing two groups of consumers with demand curves given by q1= 5−p and...

Consider a monopolist facing two groups of consumers with demand curves given by q1= 5−p and q2= 5−2p. The monopolist does not have any cost of production. (a) Find the profit-maximizing prices and quantities under third-degree price discrimination (group-specific pricing) (b) If the monopolist cannot price discriminate (must charge everyone the same price), what is the demand curve facing the firm? (Hint: remember to sum demand curves horizontally) (c) Find the profit-maximizing price and quantity for the monopolist who does...

Suppose a monopolist faces two groups of consumers. Group 1 has a demand given by P1...

Suppose a monopolist faces two groups of consumers. Group 1 has a demand given by P1 = 50−2Q1 and MR1 = 50−4Q1. Group 2 has a demand given by P2 = 40−Q2 and MR2 = 40−2Q2. The monopolist faces MC=AVC=ATC=$10 regardless of which group she supplies to. We can infer from the demand equations that in equilibrium Group __ is the inelastic group because the elasticity at that point is __ in absolute value than that of the other group....

Suppose a monopolist faces two markets with the following demand curves: Market 1: ?1 (?1 )...

Suppose a monopolist faces two markets with the following demand curves: Market 1: ?1 (?1 ) = 500 − ?1 Market 2: ?2 (?2 ) = 800 − 4?2 Let the marginal cost be $2 per unit in both markets. A) If the monopolist can price discriminate, what should be ?1 and ?2 to maximize the monopolist’s profit? B) What is the profit-maximizing price if the government requires the monopolist to charge the same price in each market? C) How...

a) A monopolist faces two totally separated markets with inverse demand p=100 – qA and p=160−2qB...

a) A monopolist faces two totally separated markets with inverse demand p=100 – qA and p=160−2qB respectively. The monopolist has no fixed costs and a marginal cost given by mc= 2/ 3 q . Find the profit maximizing total output and how much of it that is sold on market A and market B respectively if the monopoly uses third degree price discrimination. What prices will our monopolist charge in the two separate markets? b) Calculate the price elasticity of...

4. Suppose a monopolist faces two markets with the following demand curves: Market 1: ?1(?1) =...

4. Suppose a monopolist faces two markets with the following demand curves: Market 1: ?1(?1) = 400 − 2?1 Market 2: ?2(?2) = 1000 − 4?2 Let the marginal cost be $20 per unit in both markets. If the monopolist can price discriminate, what should be ?1 and ?2 to maximize the monopolist’s profit?

A monopolist faces two totally separated markets with inverse demand p=100 – qA and p=160−2qB respectively....

A monopolist faces two totally separated markets with inverse demand p=100 – qA and p=160−2qB respectively. The monopolist has no fixed costs and a marginal cost given by mc= 2 /3q Find the profit maximizing total output and how much of it that is sold on market A and market B respectively if the monopoly uses third degree price discrimination. a) What prices will our monopolist charge in the two separate markets? b) Calculate the price elasticity of demand in...

Consider a monopolist that operates on two. The total demand on the first market is D1(p1)...

Consider a monopolist that operates on two. The total demand on the first market is D1(p1) = 80 − p1. The total demand on the second market is D2(p2) = 40 − p2. Let the cost function be C(q) = 20q. (a) Suppose the monopolist cannot price discriminate , i.e., it faces a single demand D(p) = D1(p) + D2(p). Find the optimal price and quantity on each market, total monopoly profit, consumer surplus, and total surplus. (b) Suppose the...

Two firms produce differentiated products with demand curves p1=a−q1−bq2 and p2=a−q2−bq1. They both face constant average...

Two firms produce differentiated products with demand curves p1=a−q1−bq2 and p2=a−q2−bq1. They both face constant average and marginal cost c and their profit functions are Π1=(p1−c)q1 and Π2=(p2−c)q2. Solve the Cournot game.

10. Given the demand function of good 1: Q1=200-5P1+(P2)^2 Q1: the demand for good 1 P1:...

10. Given the demand function of good 1: Q1=200-5P1+(P2)^2 Q1: the demand for good 1 P1: the price for good 1 P2: the price of good 2 Answer the following questions What is the inverse demand function of good 1? Derive the expression of total revenue in terms of quantity of good 1(Q1) and price of good 2(P2). If total cost function C(Q1) = 30+(Q1)^2 , derive the profit function in terms of quantity of good 1(Q1) and price of...

A monopolist produces for two, geographically distinct markets. The demand in market A is qA =...

A monopolist produces for two, geographically distinct markets. The demand in market A is qA = 72−3p and the demand in market B is qB = 40 − 2p. The firm’s total cost function is C(qA + qB) = 5 + 2(qA + qB). The cost of transporting a good between the two markets is t. a. Suppose that transportation cost is t = 0. Find the price in each market that maximizes the monopolist’s profits. What are the corresponding...

Question