QUESTION 8 A monopolist is seeking to price discriminate by segregating the mark

Question

QUESTION 8 A monopolist is seeking to price discriminate by segregating the market. The demand in each market is given as follows: Market A: P 195-2Q Market B: P 136-2Q The monopolist faces a marginal cost of $22 and has no fixed costs. Given this information, what price should the monopolist charge in Market B? Round your answer to two decimal places. Do not include a $ sign. Note: The demand equations presented above show P equal to a function ofQ, 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

Price in Market B is 136-2Q gente Revenue will be PQ = 136Q-2Q^2

Marginal revenue is dR/dQ = 136-4Q  

& Marginal Revenue should be Marginal Cost therefore 136-4Q =22

Q=114/4 =28.5

Hence Price in Market B is 136- 2(28.5) =79

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