Suppose that the monopolist can produce with total cost: TC = 10Q. Assume that the monopolist sells its goods in two different markets separated by some distance. The demand curves in the first market and the second market are given by Q₁ = 120-1₁ and Q₂ = 240-412. Suppose that consumers can mail the product from cheaper location to a more expensive location at a certain cost. What would be the critical mailing cost above which consumers do not have such an incentive?
Suppose that the monopolist can produce with total cost: TC = 10Q. Assume that the monopolist sells its goods in two different markets separated by some distance. The demand curves in the first market and the second market are given by Q₁ = 120-1₁ and Q₂ = 240-412. Suppose that consumers can mail the product from cheaper location to a more expensive location at a certain cost. What would be the critical mailing cost above which consumers do not have such an incentive?
Chapter14: Monopoly
Section: Chapter Questions
Problem 14.6P
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Transcribed Image Text:Suppose that the monopolist can produce with total cost: TC= 10Q. Assume that the monopolist sells its
goods in two different markets separated by some distance. The demand curves in the first market and the
second market are given by Q₁ = 120-/₁ and Q₂ = 240-4/2. Suppose that consumers can mail the
product from cheaper location to a more expensive location at a certain cost. What would be the critical
mailing cost above which consumers do not have such an incentive?
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