Suppose that a firm produces identical commodities and sell them in two separate markets charging two different prices. The demand for the commodity in two markets are (1) P1 = 100 - Q1 and (2) P2 = 80 - Q2, where P1 and P2 are the price of the product that the firm charges, while Q1 and Q2 are demand in each market. Suppose that the firm's cost of production is C(Q) = 6Q. (1) What is the firm's total profit function in terms of the quantity of output? How much should this firm sell each product in two separate markets to maximize total profits?

Suppose that a firm produces identical commodities and sell them in two separate markets charging two different prices. The demand for the commodity in two markets are (1) P1 = 100 - Q1 and (2) P2 = 80 - Q2, where P1 and P2 are the price of the product that the firm charges, while Q1 and Q2 are demand in each market. Suppose that the firm's cost of production is C(Q) = 6Q. (1) What is the firm's total profit function in terms of the quantity of output? How much should this firm sell each product in two separate markets to maximize total profits?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.3P

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