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Questions › DSE › DSE 2013 › Q8
1 markMicroeconomics › Monopoly and price discrimination › Multi-plant and multi-product monopolyHardabout 3 min

DSE 2013 Question 8: Monopoly and price discrimination

Two goods are imperfect substitutes with demands D1=a−p1+bp2D_1=a-p_1+bp_2D1​=a−p1​+bp2​ and D2=a−p2+bp1D_2=a-p_2+bp_1D2​=a−p2​+bp1​, a>0a>0a>0, 0<b<10<b<10<b<1, cost ccc per unit. Find the equilibrium prices when both goods are produced by a single monopolist.

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Two goods are imperfect substitutes with demands D₁=a-p₁+bp₂ and D₂=a-p₂+bp₁, a>0, 0<b<1, cost c per unit. Find the equilibrium prices when both goods are produced by a single monopolist. (A) p₁=p₂=(a+c-bc)/(2-b) (B) p₁=p₂=(a+c-bc)/(1-b) (C) p₁=p₂=(a+c-bc)/(2(1-b)) (D) p₁=p₂=(a+c-bc)/2

Also written as: Two goods are imperfect substitutes with demands D_1=a-p_1+bp_2 and D_2=a-p_2+bp_1, a>0, 0<b<1, cost c per unit. Find the equilibrium prices when both goods are produced by a single monopolist.

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 2013 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.