Question

help with #7, please!

Notes: Show all calculations. Draw neat graphs Price discrimination by a monopolist A profit-maximizing monopolist sells the same good in 3 separate markets. The demand functions and cost function are given below Demand in Market 1: P 80-4Q, Demand in Market 2: P,-100 50 Demand in Market 3: P,-70 - 60, Cost function: C- 20 +2-4Q, where Q is total output, 1. (4 points) Obtain the firm's profit function in terms of the three choice variables Q, Q, and Q. (Note: There should be no O 2. (4 points) Using FOCs, find the optimal values of output in 3. (4 points) Obtain the Hessian. Do the SOCs correspond to a 4. (4 points) What are the prices charged by the firm in each 5. (4 points) Find the firm's maximum profit each market maximum? Explain market? 6. (8 points) Compute the elasticity of demand (e) in each market at the optimal P-Q combination. (Note: Elasticity was covered in Lecture 1.) 7. (2 points) In which market does the firm charge the highest price-the market with the highest elasticity of demand, or the one with the lowest? Explain

Answer 1

Civen that aimiling moepolt ls the Sama good ih 3 pesale enrets he cdemand nct ous and Cost uutrou ave Demand Montet P 8-us Demand in Mae 2 PL 10o Demaud Mavcet 3: P 63 tohere tota utput า. "The -ftr m change ' - he highest pice in mncet ohith leaut elastic ie, montet 2, since even ne x'ce changes -the quantity demanded io this marcet oolet sesponsive. So e mono pol corll have hihe demand He olt chorge the otwest price in the macet coith higbest elasticit