In: Economics
Suppose a monopolist is practicing price discrimination in the sale of a product by charging different prices in two separate markets. Suppose the demand curves are
P1=300-Q1 P2=250-Q2
and you are informed that the cost function is TC=6(Q1+Q2).
How much should be sold in the two markets to maximize profits?
What are the prices charged?
How much profit is lost if price discrimination is made illegal?