Business, 31.05.2021 16:00 ghari112345

A monopoly firm faces two markets where the inverse demand curves are: Market A: P_A = 140 - 2.75Q_A.

Market B: P_B = 120 - Q_B.

The firm operates a single plant where total cost is C = 20Q + 0.25Q^2, and mammal cost is m = 20 + 0.5Q.

Required:

1. Suppose the firm sets a single price for both markets. Using the information above, the profit maximizing price is $86.18 and the profit maximizing quantity is 53.37 units. Given this information, you determine that the firm will earn a profit of $ .

2. Now suppose the firm is able to engage in group price discrimination. To maximize profits, the firm will produce 16.95 units for market A and charge customers in market A a price of $ 93.39 per unit. And it will produce 36.6 units for market B and change customers in market B a price of $ per unit.

3. If the firm engages in your price discrimination it will earn a profit of $ .

Answers: 2

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Answers

Answer from: Perez8350

1. The firm will earn a profit of $2,819.94.

2. The firm will charge customers in market B a price of $83.40 per unit.

3. If the firm engages in your price discrimination it will earn a profit of $2,847.50.

Explanation:

Given:

Market A: P_A = 140 - 2.75Q_A ………………….. (1)

Market B: P_B = 120 - Q_B ……………………………(2)

C = 20Q + 0.25Q^2 ……………………………………… (3)

Marginal cost = m = 20 + 0.5Q …………………… (4)

Therefore, we have:

1. Suppose the firm sets a single price for both markets. Using the information above, the profit maximizing price is $86.18 and the profit maximizing quantity is 53.37 units. Given this information, you determine that the firm will earn a profit of $ .

P = Profit maximizing price = $86.18

Q = Profit maximizing quantity = 53.37

R = Total revenue = P * Q = $86.18 * 53.37 = $4,599.43

Substituting Q = 53.37 into equation (3), we have:

C = (20 * 53.37) + (0.25 * 53.37^2) = $1,779.49

Profit = R – C = $4,599.43 - $1,779.49 = $2,819.94

Therefore, the firm will earn a profit of $2,819.94.

2. Now suppose the firm is able to engage in group price discrimination. To maximize profits, the firm will produce 16.95 units for market A and charge customers in market A a price of $ 93.39 per unit. And it will produce 36.6 units for market B and change customers in market B a price of $ per unit.

This implies that we have:

Q_B = 36.6

Substituting Q_B = 36.6 into equation (2), we have:

P_B = 120 - 36.6 = 83.40

Therefore, the firm will charge customers in market B a price of $83.40 per unit.

3. If the firm engages in your price discrimination it will earn a profit of $ .

Q_A = 16.95

P_A = 93.39

R_A = Market A Revenue = Q_A * P_A = 16.95 * 93.39 = 1,582.96

Q_B = 36.6

P_B = 83.40

R_B = Market B Revenue = Q_B * P_B = 36.6 * 83.40 = 3,052.44

R = Total revenue = R_A + R_B = 1,582.96 + 3,052.44 = 4,635.40

Q = Q_A + Q_B = 16.95 + 36.6 = 53.55

Substituting Q = 53.55 into equation (3), we have:

C = (20 * 53.55) + (0.25 * 53.55Q^2) = 1,787.90

Profit = R - C = 4,635.40 - 1,787.90 = 2,847.50

Therefore, if the firm engages in your price discrimination it will earn a profit of $2,847.50.

Answer from: Quest

Answer:

the correct answer is economics is a game without winners or losers.

explanation:

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.

Answer from: Quest

4.94.. let me know if i'm correct

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A monopoly firm faces two markets where the inverse demand curves are: Market A: P_A = 140 - 2.75Q_...

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