Question

Question 3 Monopoly a) Discuss how monopoly markets discriminate prices by using the concept of market segmentation. b) The market demand curve for a monopoly firm is given as P = 200 – 20. Furthermore, the marginal cost is represented by the equation MC = 20 + 20. The firm's TC can be expressed as TC = 200 + Q2 + 100. Use this information to answer the questions and calculate the following: i) Profit maximizing quantity and price. ii) Total profit iii) Suppose this monopoly firm perfectly price discriminates, calculate the profit maximizing quantity and price.

Answer 1

P = 200-20. TR=P.Q = (200-29] Q Tp = ao o º - 3 Rºc MR=DTR 4 a MR = 200(1-MQA - 200-MQ MC = 20+2Q Monopoly Profit-maximizing condition MP - иска 200-UQ = 20+20 200-20 = 22 tua 6 Q = 180 Q = 180 equation -Q = 30 urūts. substituting a into price < P = 200-2 (30) = 200 - 60 P = 140 - 1500l P = $ 140 cm TR = P.2 N = 140 x 30

TR= 4200 TC = R0 (30) +(303° +100 = 600 7900 +100 = $1,600 Profit = TR-TC = 4200 -1600 = 2,600 (iii) of firm then, Perfectly MC pice discriminate, P 200-2Q = 28 +2Q 200 20 = 20 + 20 180 FUQ a = 180 substituting a= us units. into price equation P = 200 m2 cus) -200 -90 = 1 10 :
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