Question: A monopolist is deciding how to allocate output between two geographically separated markets. The demand curve for the firm's output in each market is: P1

A monopolist is deciding how to allocate output between two geographically separated

markets. The demand curve for the firm's output in each market is:

P1 = 4,000 - 100Q1

P2 = 2,000 - 50Q2

where P1 and P2 are the prices of the product in each market and Q1 and Q2 are the amounts

sold in each market. The firm's marginal cost curve is:

MC = 25Q

where Q is the firm's entire output (Q = Q1 + Q2).

a) How many units should the firm sell in each market? (Keep Q1 and Q2 in decimal

form.) [5]

b) What price should it charge in the first market? (Use Q1 in decimal form.) [1]

c) What price should it charge in the second market? (Use Q2 in decimal form.) [1]

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