Score: 0.09 of 1 pt 2017 (2 complete) HW Score: 12.01 %, 0.84 of Exercise 5 Ques

Question

Score: 0.09 of 1 pt 2017 (2 complete) HW Score: 12.01 %, 0.84 of Exercise 5 Question Help * A monopolist is deciding how to allocate output between two geographically separated markets (East Coast and Midwest). Demand and marginal revenue for the two markets are: P1 15-a, MR,-15-2Q1 P2 30-202 MR2 30-402 The monopolist's total cost is C-5+5 (, +a2) What are price, output, profits, marginal revenues, and deadweight loss if the monopolist can price discriminate? (round all answers to two decimal places) In market 1, the price is $ 10 and the quantity is 5 In market 2, the price is $ 17.50 and the quantity is 6.25 The monopolist's profit is $ 98.13 and the deadweight loss is $ 51.56 What are price, output, profits, marginal revenues, and deadweight loss if the law prohibits charging different prices in the two regions? (round all answers to two decimal places) The market price is s and the quantity in market 1 is and the quantity in market 2 is The profit is $and the deadweight loss is S

Explanation / Answer

Demand functions are Q1 = 15 – P1 and Q2 = 15 – 0.5P2. This makes market demand Q = 30 – 1.5P and so market demand in inverse form is P = 20 – 2Q/3.

Marginal revenue MR = 20 – 4Q/3

MR = MC

20 – 4Q/3 = 5

Q = 15*3/4 = 11.25

P = 20 – 2*11.25/3 = 12.50

Q1 = 15 – 12.50 = 2.5

Q2 = 15 – 0.5*12.5 = 8.75

Profit = 12.50*11.25 – 5*11.25 - 5 = 79.375

DWL = 0.5*(12.50 - 5)*(22.50 – 11.25) = 42.19

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.