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Questions › JNU › JNU SSS 2014 › Q48
2 marks, −0.5Microeconomics › Monopoly and price discrimination › Third-degree price discriminationModerateabout 2 min

JNU SSS 2014 Question 48: 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 maximum level of total profits which can be earned by the monopolist?

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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 maximum level of total profits which can be earned by the monopolist? (A) 64 (B) 72 (C) 90 (D) 105

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.

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