Assume the following for price discriminating monopolist aimed at maximizing profit. Total demand for the product of the monopolist is Q = 50-5P (P = 100-2Q) · Demand in Market one is Q1= 32-0.4P1(P1= 80-2.5Q1) · Demand in Market two is Q2= 18-0.1P2(P2= 180-10Q2) · Cost function is C = 50+40Q (where Q = Q1+ Q2) a. Find equilibrium quantities (Q1and Q2), and equilibrium prices (P1and P2), b. Calculate profit (π), c. Calculate and Interpret elasticities (ε1 and ε2)
Assume the following for price discriminating monopolist aimed at maximizing profit. Total demand for the product of the monopolist is Q = 50-5P (P = 100-2Q) · Demand in Market one is Q1= 32-0.4P1(P1= 80-2.5Q1) · Demand in Market two is Q2= 18-0.1P2(P2= 180-10Q2) · Cost function is C = 50+40Q (where Q = Q1+ Q2) a. Find equilibrium quantities (Q1and Q2), and equilibrium prices (P1and P2), b. Calculate profit (π), c. Calculate and Interpret elasticities (ε1 and ε2)
Chapter8: Monopoly
Section: Chapter Questions
Problem 9SQP
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Assume the following for
· Demand in Market one is Q1= 32-0.4P1(P1= 80-2.5Q1)
· Demand in Market two is Q2= 18-0.1P2(P2= 180-10Q2)
· Cost function is C = 50+40Q (where Q = Q1+ Q2)
a. Find
b. Calculate profit (π),
c. Calculate and Interpret elasticities (ε1 and ε2)
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