Question

NEED HELP PLEASE!

2) A monopolist is deciding on the quantity of output to produce in two different countries. Demand for the two countries are: O = Q1 12 – P1 Q2 = 12 - 2P2 ATC = MC = $4 a. (10) What are price, output, and profits, if the monopolist can price discriminate • b. (10) What are price, output, and profits, if the law prohibits charging different prices in the two countries? c. (5) Suppose that the monopolist could adopt a two-part tariff, what pricing policy should the firm follow? How do the profits of the monopolist compare to the profits arrived at in part (a) and part (b) above? Under what circumstances is the firm likely to use the two-part tariff pricing?

Answer 1

CLASSTIME/Pg. No Date 2 02 = 12-22 24-3p. is man O = 12-P, b) total = 0it02 lunii = 80.333.0 MR-8-0.66667 Mc=4 Profit when MR-me. 8- 0.666670 -4 4 & Prie=6 Profit a (6-4) 6=12 0.66667 a) df monopolist MRI= 1220 MR2 = 6-02 -12-20 zu 6-0 =4 0,- Or=2 P2 = 6-2-G Penie = 12428 Rafit (8-4) +21G- &)-a 16+2=18 can prin disch 8 lg ry Under two part tarifs Price per unit a4 However lempsum fel different P. 4 01-8 P=4 = 4 Case - 8x8 = 32 con (s = t48 16 Thus under his part tarifs Cumpsum fee in market i A total sain profit 32 in inkt 2 -16 327 16:48