A Monopolistic Firm Operates in Two Separate Markets

question 52

Essay

A monopolistic firm operates in two separate markets.No trade is possible between market A and market B.The firm has calculated the demand functions for each market as follows:
Market A p = 15 - Q; Market B p = 11 - Q
The company estimates its total cost function to be TC = 4Q.Calculate:
a.quantity,total revenue and profit when the company maximizes its profit and charges the same price in both markets
b.quantity,total revenue and profit when the company charges different prices in each market and maximizes its total profit

---

Definitions:

Equivalent Units

A concept used in cost accounting to convert partially completed goods into the equivalent of fully completed units.

First-in

A term often used in inventory management that refers to goods sold or used in the same order as they were bought or produced.

Materials

The unprocessed materials and parts employed in goods manufacturing.

Equivalent Units

A method used in cost accounting to express the amount of work done on incomplete units in terms of fully completed units.