nopolist is seeking to price discriminate by segregating the market. The demand
ID: 1108849 • Letter: N
Question
nopolist is seeking to price discriminate by segregating the market. The demand in each market is given as follows: Market A: P 166 -2Q Market B: P= 151-3Q The monopolist faces a marginal cost of $18 and has no fixed costs. Given this inoti hstare the monopolists total profits across both markets when they price discriminate? Round your answer to two decimal places. Do not include a $ sign Note: The demand equations presented above show P equal to a function of Q, rather than the usual other way around. This is so you can use the same trick used in Unit 11 to find the marginal revenue curve.Explanation / Answer
in the market A
P = 166-2Q nd TC= 18Q
TR = P*Q = 166Q-2Q^2
MR=dTR/dQ = 166 - 4Q
MC = 18
Profit max condition is MR=MC
166-4Q = 18
4Q = 148
Q = 148/4 = 37
P = 166-2*37 = 92
TR = P*Q = 92*37 = 3404
TC =18*37 = 666
Profits = TR -TC = 3404 - 666 = 2738
In the market B
P = 151-3Q
TR = P*Q = 151Q-3Q^2
MR=dTR/dQ = 151 - 6Q
MC = 18
Profit max condition is MR=MC
151-6Q = 18
6Q = 133
Q = 133/6 = 22.167
P = 84.5 = 92
TR = 92*22.167 = 2039.364
TC = 18*22.167 = 399
Profits = TR-TC = 1640.364
Total Profits = 2738+1640.364 = 4378.364
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