Essay
A firm has two markets-A and B. In Market A, demand is given by the equation P =
50 - 2Q, and marginal revenue (MR) is given by the equation MR = 50 - 4Q. In Market B, the demand equation is P = 82 - 4Q, and the marginal revenue equation is MR = 82 - 8Q. Marginal and average cost equal $2 in both markets.
a.
If the firm decides to price discriminate, what price would it charge in each market?
b.
What is the profit-maximizing quantity in each market?
c.
How much profit would it make in each market?
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