Suppose that a monopolist faces two markets with the demand curves given by ; . Let the marginal cost be constant and equal to 20. If the monopolist must charge the same price in each market, what price should it charge ?
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Suppose that a monopolist faces two markets with the demand curves given by D₁(p₁) = 100 - p₁; D₂(p₂) = 100 - 2p₂. Let the marginal cost be constant and equal to 20. If the monopolist must charge the same price in each market, what price should it charge? (A) p* = (431/3) (B) p* = 50 (C) p* = 60 (D) None of the above
Also written as: Suppose that a monopolist faces two markets with the demand curves given by D_1(p_1) = 100 - p_1; D_2(p_2) = 100 - 2p_2. Let the marginal cost be constant and equal to 20. If the monopolist must charge the same price in each market, what price should it charge?
Monopoly and price discrimination has come up 128 times in 7 exams since 2004.
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.
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Question from the JNU SIS 2020 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.