Suppose a discriminating monopolist is selling a product in four separate markets in which demand functions are: Q1 = 450 – P1; Q2 = 200 – 0.5 P2; Q3 = 150 – 0.25P3 and Q4 = 80 – 0.4P4 Cost function is TC = 95,000 – 100Q. a. As an economic adviser, determine the Prices to be charged in the three markets and amount of output to be sold in each market so that total profits can be maximized. b.Calculate the total profit to be made from the strategy of price discrimination and clearly explain how this strategy has aided this monopolist.

Suppose a discriminating monopolist is selling a product in four separate markets in which demand functions are: Q1 = 450 – P1; Q2 = 200 – 0.5 P2; Q3 = 150 – 0.25P3 and Q4 = 80 – 0.4P4 Cost function is TC = 95,000 – 100Q. a. As an economic adviser, determine the Prices to be charged in the three markets and amount of output to be sold in each market so that total profits can be maximized. b.Calculate the total profit to be made from the strategy of price discrimination and clearly explain how this strategy has aided this monopolist.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.9P

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