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Economics: Quantity and Demand

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A firm manufactures a product that is sold on two different markets (A and B) that have the following demand functions:

QA = 100 -0.50PA
QB = 60 -0.50PB

The firm has the following marginal cost function:

MC = 20 + 0.80Q

If the firm is engaging in price discrimination, what prices should be charged on each market and how many units should be sold on each market?

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Solution Summary

The solution discusses the intricacies of demand and supply under economics. The solution will be helpful to economics and finance students. Equations are provided to aid in the understanding and calculations.

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PRICE DISCRIMINATION

A firm manufactures a product that is sold on two different markets (A and B) that have the following demand functions:
QA = 100 - 0.50PA
QB = 60 - 0.50PB
The firm has the following marginal cost function:
MC = 20 + 0.80Q

If the firm is engaging in price discrimination, what prices should be charged on each market and how many units should be sold on each market?

TUTORIAL

Step 1: Determine the total ...

Solution provided by:
Chidi Ngene, M. Sc.
Education
  • B. Sc., University of Nigeria
  • M. Sc., London South Bank University
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