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Unformatted text preview: and P 2 is the price paid by the second group. The monopoly's marginal cost is given by MC = 4/9 Q, where Q is the total output produced by the monopoly. (a) Use the equations MR 1 = MR 2 = MC and Q 1 + Q 2 = Q to show that Q 1 = 50 units and Q 2 = 40 units. First, MR 1 = MR 2 Î 2404Q 1 =1202Q 2 Q 2 =2Q 160 Second, MR1=MC 2404Q 1 =(4/9)(Q 1 +Q 2 ) 2404Q 1 =(4/9)Q 1 +(4/9)(2Q 160) Then, Q 1 =50 & Q 2 =2Q 160=10060=40 Substitute these values into the demand formulas to show that P 1 = $140 per unit and P 2 = $80 per unit. (b) MR 1 =MR 2 = MC = $40 per unit....
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This note was uploaded on 03/14/2012 for the course ECON 2243 taught by Professor Henryfors during the Spring '12 term at Abant İzzet Baysal University.
 Spring '12
 henryfors
 Price Discrimination

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