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Questions › JNU › JNU SSS 2014 › Q46
2 marks, −0.5Microeconomics › Monopoly and price discrimination › Third-degree price discriminationModerateabout 2 min

JNU SSS 2014 Question 46: Monopoly and price discrimination

Consider a firm which is a monopolist in each of two completely segregated markets AAA and BBB. The total cost of the monopolist CCC is the following function of its total output Q:C=10+4QQ : C = 10 + 4QQ:C=10+4Q. The equations for the demand curves faced by the monopolist in markets AAA and BBB are PA=16−QAP_A = 16 - Q_APA​=16−QA​ and PB=36−4QBP_B = 36 - 4Q_BPB​=36−4QB​ respectively.

What is the profit-maximizing price for the firm in market BBB?

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Plain-text version

Consider a firm which is a monopolist in each of two completely segregated markets A and B. The total cost of the monopolist C is the following function of its total output Q: C = 10 + 4Q. The equations for the demand curves faced by the monopolist in markets A and B are P_A = 16 - Q_A and P_B = 36 - 4Q_B respectively. What is the profit-maximizing price for the firm in market B? (A) 10 (B) 12 (C) 16 (D) 20

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

What this question tests

This question is on Third-degree price discrimination, part of Monopoly and price discrimination in Microeconomics.

Charging different groups different prices, and how elasticities decide which group pays more.

TestStop has 14 past-paper questions on this subtopic.

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