# Profit-maximizing price: Geographically divided markets

A monopolist sells in two geographically divided markets, the East and the West. Marginal cost is constant at $50 in both markets. Demand and marginal revenue in each market are as follows:

QE = 900 - 2Pe

MRe = 450 - QE

QW = 700 - PW

MRw = 700 - 2Qw

a. Find the profit-maximizing price and quantity in each market.

b. In which market is demand more elastic?

https://brainmass.com/economics/output-and-costs/profit-maximizing-price-geographically-divided-markets-543427

#### Solution Preview

a. Find the profit-maximizing price and quantity in each market.

Marginal Cost=MC=$50

Market : East

MRe=450-QE

Put MRe=MC

450-QE=50

QE=400

QE=900-2Pe

Put QE=400

400=900-2Pe

2Pe=500

Pe=250

Profit Maximizing price in East=$250

Profit Maximizing ...

#### Solution Summary

Solution depicts the steps to find out the optimal price and output combinations in two different markets.

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