3-6. A monopolist is seeking to price discriminate by segregating the market. Th

Question

3-6.

A monopolist is seeking to price discriminate by segregating the market. The demand in each market is given as follows:

Market A: P = 193 - 1Q
Market B: P = 101 - 4Q

The monopolist faces a marginal cost of $23 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 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

a monopolist maximize profits in such a way that

MR = MC

SO FOR MARKET B

MR = 101-8Q

101-8Q = 23

SO Q = 9.75, AT THIS QUANTITY THE PRICE CHARGED IS 101-4*9.75 = 62

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