Price-discriminating monopolist
Macroeconomics
A price-discriminating monopolist faces the following inverse demand functions:
In Market One it is P1 = 20-Q1 where P1 is the price charged in Market 1 and Q1 is
the quantity demanded in Market one. In Market Two it is P2 = 15-1.5Q2 where P2 is
the price charged in Market 2 and Q2 is the quantity demanded in Market Two.
Marginal cost is constant at $5. Find the profit-maximizing quantity and price
charged in each market. Calculate profit in each market and joint profit.
What would this firm’s price, quantity and profit be if it were constrained to
charge the same price to all consumers?
