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A monopolist has two segmented markets with demand curves given by P1 = 160- Q1 and P2...

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Economics

  1. A monopolist has two segmented markets with demandcurves given by

P1 = 160- Q1 and P2 = 130 - 0.5Q2

where p1 and p2 are the prices charged in each marketsegment, and Q1 and Q2 are the quantities sold. Its cost functionis given by c(Q) = 2Q2, where Q = Q1 + Q2.

a. What type of price discrimination does thisentail?

b. Find the monopolist's profit-maximizing price andquantity for each segment.

c. What is the relative price markup for eachsegment?

d. Find the profit for the monopoly.

e. Find the elasticity of demand for both demandfunctions.

f. From b, which segment should be charged a higherprice?

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