A monopolist sells in 2 markets and produces in 1 factory. Although the monopolist can charge difference prices in the two markets, it must sell all units within a market at the same price.a) Suppose this monopolist does not have a marginal cost (MC = 0). If demand in market 1 isX1(p1) = a1 - b1p1 and demand in market 2 is X2(p2) = a2 - b2p2, set up the monopolist's profit maximization problems and solve for the market prices that result in each market.b) Under what conditions on a1, b1, a2, b2 from above will the monopolist not price discriminate?c) If demand in market i, where i = 1 , 2, is instead Xi(pi) = ai pi^(-bi) and the monopolist has some constant marginal cost of c, where c > 0, set up the monopolist's profit maximization problem and solve for the market prices. 3. A monopolist sells in 2 markets and produces in 1 factory. Although the monopolist can charge difference prices inthe two markets, it must sell all units within a market at the same price.a) Suppose this monopolist does not have a marginal cost (MC = 0). If demand in market 1 is X,(P1) = a, – b,p1 anddemand in market 2 is X2 (p2) = a, – baP2, set up the monopolist's profit maximization problems and solve for themarket prices that result in each market.b) Under what conditions on a, b,, a2, b2 from above will the monopolist not price discriminate?-bịc) If demand in market i, where i = 1, 2, is instead X,(p;) = a;p,i and the monopolist has some constant marginalcost of c, where c>0, set up the monopolist's profit maximization problem and solve for the market prices.

One seller or manufacturer controls the entire market in a monopoly. In a monopoly, the supply and…

Answered: A monopolist sells in 2 markets and…

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter14: Monopoly

Section: Chapter Questions

Problem 14.2P

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A monopolist sells in 2 markets and produces in 1 factory. Although the monopolist can charge difference prices in the two markets, it must sell all units within a market at the same price.

a) Suppose this monopolist does not have a marginal cost (MC = 0). If demand in market 1 is
X1(p1) = a1 - b1p1 and demand in market 2 is X2(p2) = a2 - b2p2, set up the monopolist's profit maximization problems and solve for the market prices that result in each market.

b) Under what conditions on a1, b1, a2, b2 from above will the monopolist not price discriminate?

c) If demand in market i, where i = 1 , 2, is instead Xi(pi) = ai pi^(-bi) and the monopolist has some constant marginal cost of c, where c > 0, set up the monopolist's profit maximization problem and solve for the market prices.

3. A monopolist sells in 2 markets and produces in 1 factory. Although the monopolist can charge difference prices in
the two markets, it must sell all units within a market at the same price.
a) Suppose this monopolist does not have a marginal cost (MC = 0). If demand in market 1 is X,(P1) = a, – b,p1 and
demand in market 2 is X2 (p2) = a, – baP2, set up the monopolist's profit maximization problems and solve for the
market prices that result in each market.
b) Under what conditions on a, b,, a2, b2 from above will the monopolist not price discriminate?
-bị
c) If demand in market i, where i = 1, 2, is instead X,(p;) = a;p,i and the monopolist has some constant marginal
cost of c, where c>0, set up the monopolist's profit maximization problem and solve for the market prices.

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