A monopolist is seeking to price discriminate by segregating the market. The dem

Question

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

Market A: P = 129 - 2Q
Market B: P = 191 - 2Q

The monopolist faces a marginal cost of $20 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

the monopolist maximize profits in such a way that a markup is charged over the marginal cost,

so MR = MC

191-4Q = 20

SO Q = 42.75

P = 105.5

SO THE MONOPOLIST SHOULD CHARGE A PRICE OF 105.5

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.