Market Segmentation

Question 1

Consider a monopolist with total costs of TC = Q2 + 4Q + 36 and marginal costs of MC = 2Q + 4.
They face two demands of P1 = 100 - Q1 and P2 = 400 - Q2. Round answers to one decimal place.

1) What is the monopoly equilibrium price and quantity for market 1?

P1 = Q1 =

2) What is the monopoly equilibrium price and quantity for market 2?

P2 = Q2 =

3) What is the monopolist's profit from setting separate market prices?

Profit =

4) How much of an arbitrage opportunity is available with separate pricing?

Arbitrage Profit =

5) What is the equation for inverted aggregate demand for when both markets open?

PM = - QM

6) What is the uniform equilibrium market price and quantity?

P* = Q* =

7) What is the monopolist's profit from setting a uniform price?

Profit =

8) The monopolist is more profitable with pricing.

Score = 0