Consider a monopolist that sells in two separated markets. The inverse demand curve in market 1 is given by P₁ = 800-20₁ and the inverse demand curve in market 2 is given by P₂ = 600 - Q₂- The firm's total cost function is given by TC(Q) = Q², where Q Q₁+Q₂. Since the two markets are totally separated, and any resale opportunity is not there, the monopolist wants to maximize the profit by charging different prices. (a) What is this pricing strategy called? (b) Find the profit-maximizing quantities (Q₁, Q;) for each market. (e) Find the profit-maximizing prices (Pi, Pi) for each market.

Consider a monopolist that sells in two separated markets. The inverse demand curve in market 1 is given by P₁ = 800-20₁ and the inverse demand curve in market 2 is given by P₂ = 600 - Q₂- The firm's total cost function is given by TC(Q) = Q², where Q Q₁+Q₂. Since the two markets are totally separated, and any resale opportunity is not there, the monopolist wants to maximize the profit by charging different prices. (a) What is this pricing strategy called? (b) Find the profit-maximizing quantities (Q₁, Q;) for each market. (e) Find the profit-maximizing prices (Pi, Pi) for each market.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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