Question #71192

A monopoly price discriminates between two markets:
Market 1 P1 = 500 - Q1
Market 2 P2 = 300 - Q2
Total Cost = 15000 + 100Q where Q = Q1 + Q2
Required: Determine the quantity and price of each market and the total profit.

Expert's answer

TC=15000+100(Q1+Q2)

MC1=100

MC2=100

TR1=P*Q1=500Q1-Q1^2

TR2=P*Q2=300Q2-Q2^2

MC1=500-2Q1

MC2=300-2Q2

100=500-2Q1

2Q1=400

Q1=200

100=300-2Q2

2Q2=200

Q2=100

P1=500-200=300

P2=300-100=200

MC1=100

MC2=100

TR1=P*Q1=500Q1-Q1^2

TR2=P*Q2=300Q2-Q2^2

MC1=500-2Q1

MC2=300-2Q2

100=500-2Q1

2Q1=400

Q1=200

100=300-2Q2

2Q2=200

Q2=100

P1=500-200=300

P2=300-100=200

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