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Business, 30.05.2020 15:58 samreitz1147

G Consider monopoly firm that produces diamonds. This firm sells in two distinct markets, one is completely sealed off from the other. The inverse demand curve for the firm's product in the first market (market 1) is p_1 = 16 - 0.5q_1. The inverse demand curve in the second market (market 2) is p_2 = 26-0.5q_2. The firm's cost function is C(q) = 10q, where q is the firm's entire output (destined for either market: q = q_1+q_2). The firm's objective is to maximize profits. The government imposes a unit tax t=1 on quantity sold in each market and the firm can charge different uniform prices in different markets. What price should the firm charge in each market to maximize profit?

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