Question

A monopolist sells a good in two markets, and he is only capable of doing simple per-unit pricing in each market. The inverse demand curve in the two markets are

pi = 100 – q1,P2 = 100 – 4q2 respectively. The firm's total cost is (q1 + 2)². Suppose that the monopolist can charge different prices in each market what is the objective function of the monopolist What are the profit-maximizing quantities qh, q2 in the two markets? What are the profit-maximizing prices p1, P2 in the two markets? Suppose that the monopolist have to charge the same price in each market. In this case,you need to find the total demand first. What is it? (hint: sum up the individual market demands q1, q2 to get Q for each possible price P) What is the objective function for part d (in terms of Q)? (1 mark) Sketch the objective function (with Q being the horizontal axis). Find out the profit-maximizing quantity Q and the profit-maximizing price P.

Fig: 1

Fig: 2

Fig: 3

Fig: 4

Fig: 5

Fig: 6

Fig: 7

Fig: 8