The Cra monopoly manufactures clones. The demand comes from two different categories of consumers, Siths and Jedis.
Question:
The Cra monopoly manufactures clones. The demand comes from two different categories of consumers, Siths and Jedis. The inverse demand functions of the two groups are respectively: ps =100qs and pj =200-2qj The total monopoly cost function is C(Q) =0.5Q2 with Q=qs +qj . 1. How will this monopoly behave if the law forbids it to discriminate by price? Determine the quantity supplied that maximizes his profit. Calculate the value of this profit. 2. What strategy will the monopoly adopt if the law now authorizes it to discriminate by price? How much will it produce? How will he distribute this volume of production? How much will be its profit to the optimum? 3. Calculate the value of the price elasticity of demand in each market. Check the relationship between marginal revenue, selling price and elasticity of demand.
Expert Answer:
The Cra Monopoly Price Discrimination vs Single Price 1 Single Price No Price Discrimination Combine... View the full answer
