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    Firm A has no costs of production and sells its production i

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    Firm A has no costs of production and sells its production in two buyers. Buyer 1's demand function is
    p1 = 90 - 10y1
    and Buyer 2's demand function is
    p2 = 60 - 5y2
    Assuming that the firm can engage in ordinary price discrimination, find the profit maximizing prices.

    What is firm A's profit?
    Now suppose that the firm cannot price-discriminate.
    First find the firms aggregate demand function.
    Then find its marginal revenue function.
    Find its profit maximizing price, and compute its profit

    © BrainMass Inc. brainmass.com October 9, 2019, 8:36 pm ad1c9bdddf
    https://brainmass.com/economics/production/firm-a-has-no-costs-of-production-and-sells-its-production-i-156604

    Solution Preview

    p1 = 90 - 10y1

    Total Profit = 90y1 - 10y1^2

    dprofit / dy1 = 90 - 20y1

    y1 = 4.5 (substituting dprofit /dy1 = 0 for profit maximization)

    total profit from p1 = 90x4.5 - 10 (4.5)^2 = ...

    $2.19