2) A monopolist is deciding on the quantity of output to produce in two different countries. Demand or the two countries are: . Q₁ = 12 - P₁ . Q2 = 12 - 2P₂ • ATC=MC = $4 . .a. What are price, output, and profits, if the monopolist can price discriminate .b. What are price, output, and profits,if the law prohibits charging different prices in the two countries? c.) Suppose that the monopolist could adopt a two-part tariff, what pricing policy should the firm follow? How do the profits of the monopolist compare to the profits arrived at in part (a) and part (b) above? Under what circumstances is the firm likely to use the two-part tariff pricing?

2) A monopolist is deciding on the quantity of output to produce in two different countries. Demand or the two countries are: . Q₁ = 12 - P₁ . Q2 = 12 - 2P₂ • ATC=MC = $4 . .a. What are price, output, and profits, if the monopolist can price discriminate .b. What are price, output, and profits,if the law prohibits charging different prices in the two countries? c.) Suppose that the monopolist could adopt a two-part tariff, what pricing policy should the firm follow? How do the profits of the monopolist compare to the profits arrived at in part (a) and part (b) above? Under what circumstances is the firm likely to use the two-part tariff pricing?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.2P

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