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Find the profit- maximizing price and quantity in each market

05 / 03 / 2018 Assignment

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A monopolist
sells in two geographically divided markets, the East and the West. Marginal
cost is

constant at $50 in
both markets.

Demand and marginal
revenue in each market are as follows:

Qe = 1200 – 2Pe

MRe = 600 – Qe

Qw = 800 – Pw

MRw = 800 – 2Qw

Where e represents
the east, and w represents the west market.

a. Find the profit-
maximizing price and quantity in each market.

b. In which market
is demand more elastic? How can you tell? Describe.

c. Under what
conditions, price discrimination is effective and why?


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