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.
1. (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.
2. (b) Suppose the monopolist can charge a different price on each of the two mar- kets. Find the optimal price and quantity on each market, total monopoly profit, consumer surplus, and total surplus.
3. (c) Suppose that the monopolist can separate the markets and practice perfectprice discrimination within each market. Find the quantity traded on each market, total monopoly profit, consumer surplus, and total surplus.

Expert Solution

Rahul Sunny answered 11 months ago

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