A monopolist sells in two states and has constant marginal cost MC =10. Demand in market...

A monopolist sells in two states and has constant marginal cost MC =10. Demand in market 1 is Q₁ = 50- p₁. Market 2 demand is Q₂ = 90-1.5p₂.

a) If the monopolist is unable to discriminate price, what would be the profit maximizing price and quantity?

b) If the monopolist can discriminate price between two states, what would the price and quantity in each market?

c) Calculate the demand elasticity of each market and explain the price strategy.

Expert Solution

Rahul Sunny answered 2 years ago

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