Question

A monopolist faces two consumer groups: old and young. The inverse demand of old clients for the output of the monopolist is P_o = 130 – 3Q_o.  The inverse demand of young clients for the output of the monopolist is P_y = 300 – 6Q_y.  The marginal cost of supplying any type of client is MC = 10.  If the monopolist can price discriminate between the two groups

1. What will be the quantity for old?

Select one:

a.

1. 0o <10;

1. 0o <10;

0o <10;

1. 0o <10;

1. 0o <10;

1. 0o <10;

b.

1. 10o <30;

c.

1. 30o <60;

d.

1. 60o <100;

what price will old and clients be charged?

Select one:

a.

1. 0<P_o <10;

b.

1. 10<Q_o <30;

c.

1. 30<Q_o <60;

d.

1. 60<Q_o <100;

e.

1. None of the above

What will be the quantity for young?

Select one:

a. 0<Q_y <10

b.

1. 10<Q_y <30;

c.

1. 30<Q_y <60;

d.

1. 60<Q_y <100;

e. None of the above

what price will young clients be charged?

Select one:

a.

1. 0<P_y <10;

b. 10<P_y <30

c.

1. 30<P_y <60;

d.

1. 60<P_y <100;

e.

1. None of the above

What will be the firm’s profit?

Select one:

a.

1. 0<pi <1000;

b.

1. 1000<pi<3000;

c.

1. 3000<pi <6000;

d.

1. 6000<pi <10000;

e.

1. None of the above

Answer 1

Prost group: P = 30-300 Mc =10 MR TRo 1300-802 MRO = 130 - 600. In qulbrun , MRO - MG 130 - 690 = 10 120 = 600 20 = Co Po=130-8X20 = 70 Second gocup: Py = 300- bay Me=10 MRy = 300 - 1264, in equbrum iMRG = MC 300- laøy = lo 390 = lay 24.17. - Py = 300 - 6 X24:17 = 155 (approx). poosit in old market - Polo-CCOO) = (Po-C) Oo = (70-10) Do = 1200 Poopit in young markit = (Py-Clay = (155-10) 24.17 =8504.65 Total prosit = 1200t 3504065 = 470465

let me answer here 1. (c) 3Qo<60 (old quantity) 2. (d) Po 8 Go LP <loo (old price) 3 (6) 10LQy (30 4. Py = 156 (e) none of the above so From's profit (0) 3000C Pik 6000