A Monopolist Operates in Two Markets Whose Demand Functions Are

question 8

Essay

A monopolist operates in two markets whose demand functions are p₁ = 100 - q₁ and p₂ =120 - 0.5q₂. The monopolist has a constant marginal cost of $40.
a)Find the prices and market quantities when the monopolist cannot price discriminate between the two markets.
b)Calculate the price elasticity for each market demand and evaluate it at the price and quantities derived in a. If the monopolist is allowed to use price discrimination, which one of the two markets will have a higher price? Why?
c)Find the price and market quantities when the monopolist can price discriminate between the two markets.
d)Will the consumers in the first market be better off with discrimination or not? What about the consumers in the second market?

---

Definitions:

MEDLINE

A comprehensive database of biomedical literature, including research articles, reviews, and other scholarly information, maintained by the National Library of Medicine.

Clinical Guidelines

Systematically developed statements to assist practitioner and patient decisions about appropriate health care for specific clinical circumstances.

Care Delivery Outcomes

The results or impacts of healthcare services and interventions on the health status of patients or populations.

Entire Institution

Refers to the whole of an organization or establishment, especially in contexts concerning its policies, culture, or practices.