Workshop+Solution

To profit maximise a firm must satisfy the condition

This preview shows page 1. Sign up to view the full content.

This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: low: ……………………………[1] ( ) ………………………………………………………...[2] Sub [1] into [2] ( ) ( ) ) ………………………………………………………………………………….[3] Sub [3] into [1] To get prices use the inverse demand functions P1 = 200 10 = 190 P2 = 400 110 = 290 Problem 3 Diagrams for part a) and b) 40 P* 20 P=MC P* MC D 10 10 MC 10 40 MR MR Q* QC Pensioners Market 20 Q* 2 0 D QC Non Pensioners Market a) Using this model the market produces the quantity where MR1 =MC = MR2 at the corresponding price(calculated using the inverse demand curve for each reprective market) For each Pensioner For each Non Pensioner b) Under perfect price discrimination the output level is similar to that of perfect competition, Qc though prices vary for each unit of output. For each Pensioner To get Qc make P = MC ̇ For each Non Pensioner To get Qc make P = MC ̇...
View Full Document

This document was uploaded on 04/05/2014.

Ask a homework question - tutors are online