a) A Dutch Brewing company produces Heineken beer, assume further that the marginal cost of producing a six pack of Heineken Beer is $6. Dutch Brewing company sells Heineken in two different Markets namely Africa and Europe whose inverse demand functions are ?? = 24 − ?? and ?? = 12 − 0.5?? respectively. Required a) Calculate the profit maximising Price-Quantity combinations in these two markets Africa and Europe. b) With this Pricing strategy calculate the profit. c) If competitive output (P=MC=6) for Africa is 18 and Europe is 12, Compute the deadweight losses in the two markets.
a) A Dutch Brewing company produces Heineken beer, assume further that the marginal cost of
producing a six pack of Heineken Beer is $6. Dutch Brewing company sells Heineken in two
different Markets namely Africa and Europe whose inverse
and ?? = 12 − 0.5?? respectively.
Required
a) Calculate the profit maximising Price-Quantity combinations in these two markets Africa and
Europe.
b) With this Pricing strategy calculate the profit.
c) If competitive output (P=MC=6) for Africa is 18 and Europe is 12, Compute the
losses
d) Clearly illustrates that the third degree
price policy.
e) Suppose these markets were no longer separated. How would you construct the market demand in
this situation? Would the monopolist’s profit-maximizing single price still be 15?
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