The following shows the demands and marginal revenue in two markets (D1 and MR1, and D2 and
Question:
The following shows the demands and marginal revenue in two markets (D1 and MR1, and D2 and MR2) for a price discriminating firm along with total demand, DT, marginal revenue, MRT, and marginal cost MC.
As with the PPT slides, you can view the data generating these lines; for reference,
D1 = 300 - 0.1Q
D2 = 450 - 0.1Q
MRT = 375 - 0.1Q
DT = 375 - 0.05Q
MC = 0.00017Q^2 - 0.35Q + 291.875
a. Compare the demand conditions in each market; i.e. how do the two markets differ in their demand for the firm's product?
b. How much total output should the firm produce (for both markets combined)? How should that output be allocated between markets 1 and 2?
c. What price should the firm charge in each market?
TranscribedTextMicroeconomics Theory and Applications
ISBN: 978-1118758878
12th edition
Authors: Edgar K. Browning, Mark A. Zupan