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Monopolist

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Marginal cost is constant at $50 in both east and west markets. Demand and Marginal revenue are the same:
Qe=900-2Pe
MRe=450-Qe
Qw=700-Pw
MRw=700-2Qw
a. What is the profit maximum price and quantity for each market
b. Which market is more elastic

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Solution Summary

Monopolist of marginal costs are examined for east and west markets.

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Profit maximization rule MR = MC

first we look at market e

MR = 450-Qe = 50 = MC, Qe = 400.

Qe = 900-2Pe = 400, so Pe = 250

Now we look at ...

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