2).Suppose the monopolist still faces two consumers, Antonio and Bianca. Their i

Question

2).Suppose the monopolist still faces two consumers, Antonio and Bianca. Their inverse demand functions are given by the following formulas: pA(yA) = 6 y pB(yB) = 8 y/ 2. Suppose that the monopolist can choose what per-unit price to offer Antonio and what per-unit price to offer Bianca, but cannot make that price dependent on the number of units purchased. a) Write down the monopolist’s profit as a function of yA and yB, the amounts sold to Antonio and Bianca, respectively. b) For what yA and yB is the monopolist’s profit maximized?

Explanation / Answer

Monopolist profit will be maximized where market demand = 14-3/2Y (6-y+8-y/2)

To find profit maximizing level, It is necessary to know MC.

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