Question: The cost function for a monopoly is given by C = 5Q. The firm sells its output in two distinct markets with (inverse) demand functions

The cost function for a monopoly is given by C = 5Q. The firm sells its output in two distinct markets with (inverse) demand functions given by:

P1

= 55

– Q1 P2

= 35

– Q2

(a) Under what conditions can the monopolist successfully practice price discrimination in these two markets?

(b) Determine the profit maximizing amounts sold in each market and, hence, the firm’s total output.

(c) Determine the price charged by the monopoly in each market.

(d) Calculate total profit for the firm.

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