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Questions › DSE › DSE 2004 › Q11
2 marks, −1Microeconomics › Monopoly and price discrimination › Multi-plant and multi-product monopolyModerateabout 2 min

DSE 2004 Question 11: Monopoly and price discrimination

For the setting with p=1−q1−q2p=1-q_1-q_2p=1−q1​−q2​, C1(q1)=cq1C_1(q_1)=cq_1C1​(q1​)=cq1​ and C2(q2)=q2/2C_2(q_2)=q_2/2C2​(q2​)=q2​/2: suppose Firm 111 takes over Firm 222 to become a monopolist and c=2/3c=2/3c=2/3. The new monopolist firm will

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For the setting with p=1-q₁-q₂, C₁(q₁)=cq₁ and C₂(q₂)=q₂/2: suppose Firm 1 takes over Firm 2 to become a monopolist and c=2/3. The new monopolist firm will (A) produce 2/3 of the output in Plant 1 and 1/3 of the output in Plant 2 (B) produce 1/3 of the output in Plant 1 and 2/3 of the output in Plant 2 (C) divide the output equally between the two plants (D) produce nothing in Plant 1

Also written as: For the setting with p=1-q_1-q_2, C_1(q_1)=cq_1 and C_2(q_2)=q_2/2: suppose Firm 1 takes over Firm 2 to become a monopolist and c=2/3. The new monopolist firm will

Monopoly and price discrimination has come up 128 times in 7 exams since 2004.

What this question tests

This question is on Multi-plant and multi-product monopoly, part of Monopoly and price discrimination in Microeconomics.

How a monopolist allocates output across plants, markets or products.

TestStop has 9 past-paper questions on this subtopic; the nearest in year are below.

  • IIT JAM 2021 · Q53A firm has two plants with TC₁ = 500 + 30Q₁ and TC₂ = 1500 + 20Q₂. Demand is Q^d = 150 - P/3. The value of…
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Question from the DSE 2004 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.