3-9. A monopolist is seeking to price discriminate by segregating the market. Th

Question

3-9.

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

Market A: P = 152 - 1Q
Market B: P = 124 - 2Q

The monopolist faces a marginal cost of $16 and has no fixed costs. Given this information, what are the monopolists total profits across both markets when they price discriminate?

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

MRa= MRb =MC

152-2Q = 16----------- Q = 68

124-4Q = 16---------- q = 27

Pa = 84 AND Pb = 124-2*27 = 70

profits = (84-16)*68+(70-16)(27) = 4624+1458 = 6082

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