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Questions › IIT JAM › IIT JAM 2025 › Q43
1 markMicroeconomics › Monopoly and price discrimination › Multi-plant and multi-product monopolyHardabout 4 min

IIT JAM 2025 Question 43: Monopoly and price discrimination

A monopolist produces two commodities 1 and 2 in quantities x1x_1x1​ and x2x_2x2​ at a constant average cost of Rs.2.50 and Rs.3.00 per item, respectively. If p1p_1p1​ and p2p_2p2​ stand for the prices charged and the market demands are: x1=5(p2−p1)x_1=5(p_2-p_1)x1​=5(p2​−p1​) and x2=32+5p1−10p2x_2=32+5p_1-10p_2x2​=32+5p1​−10p2​. The price p1p_1p1​ for commodity 1 at which the monopolist's total profit is maximised is ________ (rounded off to two decimal places).

Answer and worked solution

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Plain-text version

A monopolist produces two commodities 1 and 2 in quantities x₁ and x₂ at a constant average cost of Rs.2.50 and Rs.3.00 per item, respectively. If p₁ and p₂ stand for the prices charged and the market demands are: x₁=5(p₂-p₁) and x₂=32+5p₁-10p₂. The price p₁ for commodity 1 at which the monopolist's total profit is maximised is (*rounded off to two decimal places*).

Also written as: A monopolist produces two commodities 1 and 2 in quantities x_1 and x_2 at a constant average cost of Rs.2.50 and Rs.3.00 per item, respectively. If p_1 and p_2 stand for the prices charged and the market demands are: x_1=5(p_2-p_1) and x_2=32+5p_1-10p_2. The price p_1 for commodity 1 at which the monopolist's total profit is maximised is (*rounded off to two decimal places*).

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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